Dimensionality

There is growing unrest and growing movement. People are changing and relocating. It is all about Brexit. We see the news; we see the blips and the funny quotes. This week the funny moment was a Scottish girl who would not accept the outcome of the Brexit referendum, because this was a democracy. OK, we all have moments and that was a golden one, no doubt about it. I am pro Brexit, not because it is a great idea, but because the ECB did not leave us an option. The irresponsible spending by Mario Draghi with his stimulus got the EU €3,000,000,000,000 in additional debt with no hope of resolving it within several decades. Now with another recession on the horizon, the EU member states will learn the hard way what a recession does when there are no checks, balances or reserves available so this time around it will strong to the largest degree.

Yet, that is not what this is about. We see part of the issue (at https://www.euronews.com/2019/08/26/nearly-100-companies-move-to-netherlands-ahead-of-brexit-dutch-agency) where “Nearly 100 companies have relocated from Britain to the Netherlands or set up offices there to be within the European Union due to the United Kingdom’s planned departure from the bloc, a Dutch government agency said on Monday” It is a move that might seem nice, but there is a hidden trap in all this. These players are shifting to a nation (whichever nation), and whilst they think that setting up shop in the EU with its 513 million people was a good idea, that number still includes the UK and after the switch they are vying with other competitors for 444 million customers, whilst they left the 69 million people they already had. Germany has 82 million, France, Spain and Italy have less than the UK as population, implying that they are a smaller pond to fish in. The issue is not that they are all part of one EU, they are well over 20 member states, all with their own little local laws and that is what these people forgot. They walked away from 69 million UK consumers and now others can grow in their place.

This is not always the case, but yes, to the largest extent, these 100 companies have moved house leaving opportunity to others. Would you remain a customer of (example) Lloyds insurance when you have to connect to the Netherlands for your insurance? When the ‘main office’ gets involved all little quirks come out. We saw it in the past and we will see it in the future. A large block of people will vacate and seek local representation that is how people work. And it all sounds nice to have the new office in Amsterdam, but that market is pretty saturated and even if it was not, The Dutch have their own language, things will take a beating and those vacating British shores will face impact and reduced clientele, as well as diminished exposure and opportunity.

Feel free to remain in denial, just remember, you yourself are your own best example. For the bulk a lot will seem the same, you get your Netflix, you get your amazon and you get from Google what you need. These are true global players. Your services will alter, your goods will be localised and your financial needs will be locally catered. That was the path everyone ignored, it was the path that would always impact. Listening to European politicians was never a good idea and these players will face that certainty soon enough.

When we look at the quote: “The businesses are in finance, information technology, media, advertising, life sciences and health, the NFIA said” you think you have a good deal, but do you? Finance? Banks are local, mortgage tends to remain local and a whole host of options was always available globally, that never changed and those trying to skim more lucrative deals will soon learn that others will vie for the 69 million Brits needing services and they will adhere to local markets. IT, that will not change, it is an import market and moving out of the UK was never going to be a larger issue, yet losing a 13.5% market to other players is never a good idea. Those who relocated against those who opened another office for the time being are going to see things very differently soon enough and once these 100 companies see that the shift out of the EU will start to pay off much better in years 3 and 4 for the UK. At that point the momentum in the plus will start stronger and that results in better investments and stronger needs for these 69 million consumers. The problem is that once out of the UK these players will find it much harder to get deals done as there is no local representation. It will be a lot more expensive to get and retain British customers. The lessons learned the hard way 35 years earlier will rear its ugly head once more.

More important, the additional Stimulus cannot be pushed onto the UK so the other member states will have to pays for that, taking the UK out of the decision stream allowed for that change and now a large chunk of that €3,000,000,000,000 is now all on the other players (mostly Germany, France and Italy) and they will not like that one bit.

Yes, I acknowledge that there are some situations that have an optional advantage, but the larger extend falls away as those people are truly global and moving out of the UK merely implies that 13.5% of the total EU customer base is now not on their income path, it needs to be an alternative path with jumps, kicks, levels and springs. It lowers their revenue margin giving them additional worry down the road to please their shareholders and that is beside the point that they lost out on 13.5% of the entire EU market.

Now that the Queen has accepted the plan to suspend parliament, we see outrage, at this point a lot of 11th hour plans for people to make some Bremain move are no longer an option, now the panic sets in and those who have not made a clear investigation on the opportunity that Brexit offers will run and jump the ship, only to learn that they forgot they needed swimming lessons to make it to another shore. So as we consider UK’s largest Joke (Jeremy Corbyn) with “Suspending Parliament is not acceptable, it is not on. What the prime minister is doing is a smash and grab on our democracy to force through a no deal“, to him the message is simple and rather clear: “You had three years to find a solution as the people had elected to Brexit. The childish games, long winded speeches and inconsiderate choices will now cost you dearly” , my personal response is even more apt when we consider the Sun with “Jeremy Corbyn ‘plots coalition of chaos’ as he softens terms for Remainer pact to block No Deal Brexit. Jeremy Corbyn is leading pro-Remain talks with opposition parties to block a No Deal Brexit” only two days ago. As I personally see it, it was a childish attempt to stop Brexit from happening. The math is actually simple. The got nowhere in three years, that means that they are incapable of getting anything done, or they merely wanted to stare Brexit to death, neither option was acceptable and it is time for everyone to accept the stupidity of UK Labour. In all this the EU has acted like a petulant child for the longest time and now that Brexit, optional no-deal Brexit becomes a fact the larger players will have figured out that 69 million consumers are important. The people who vacated the UK whilst nothing was a given have given up their jobs to others, others who will now feel the caress of having some decent money. It is not a great place, but a better place and as the economy takes off as unemployment levels drops with a larger skip, the math of deficit also changes to the favour of the UK coffers. there are more impacts, not all positive, but to a larger extent the UK will have a stronger position in year two and it only reinforces the options for years three and four, making larger waves in decimating debts whilst the EU will get a truckload of additional debts soon thereafter.

It was always about dimensionality and those who could see past the simple top line that he media was hiding behind. The status for the UK will not change overnight, but it will change for the better soon enough and once those running rats (a ships reference) figure that out that they changed a passenger liner for a sinking barge, at that point will we see an interesting demonstration in entertainment and long winded speech wankers (for lack of a better term).

In my view, there is one small additional truth, Jeremy Corbyn might become the Caretaker PM, but merely a ‘Catetaker Pro Mortuarium’, a cemetery where he left the cadavers of his own short sighted stupidity and good luck to him weeding out those graves, it will be a full time task. I wonder how many large corporations are willing to stand behind Jeremy Corbyn whilst we know that those players are only in it to extent the status quo of their required greed. Who could ever support that stage when they can clearly see all the players and what they really care for?

 

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