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The Financial Ironmonger Blog no 48/2017

The Financial Ironmonger Blog no 48/2017

Every week our guest blogger, David Oakes of Mosaic Money Management (aka The Financial Ironmonger), shares with us his take on some of the major UK and overseas macro and political events that shaped the previous week.

Please be reminded the value of investments, and the income from them, may fall or rise. The views expressed in this article are those of the author at the date of publication and not necessarily those of Chelverton Asset Management Limited or Mosaic Money Management. The contents of this article are not intended as investment or tax advice and will not be updated after publication unless otherwise stated.


At last, there seems to be some movement on the Brexit negotiations, although the general fog of war means that it is not clear what the UK offer is, in terms of money, and even suggestions that the voters will never be told. But it is thought to be some £45bn, for starters. Downing Street insists that this is only due and payable if there is a satisfactory outcome to the trade talks, and all other outstanding matters, whilst the Germans and the French are saying that there is no correlation between the two, and that the sum is payable, irrespective of the outcome.

There is no way that any politician from any party could persuade the electorate that we should pay this money just to progress to the next stage in the talks, so it is another example of the brinkmanship that will become the norm.

There are two other obstacles to progress. There is the thorny problem of whether the European Courts of Justice will be the ultimate arbiter during the transition period, and thereafter if it will be the “go to” place for EU citizens living in the UK. This is plain nonsense. If you visit any country in the world, you are subject to their local laws, however long you stay, as people routinely find out to their cost. It is thought that some kind of fudge has been found.

The final point that needs to be resolved is the question of the border between Eire, (which is staying in the EU), and Northern Ireland, (which is leaving, along with the rest of the UK). This is to invent a problem when one does not exist. Certainly, there is a need for hard borders in some parts of Europe, but last time I checked, Dublin was not overrun by people who had arrived on smugglers boats.

There are many different tax systems within the EU, already. Alcohol and cigarettes are less than half the price in Italy compared to the UK, and there will be those who seek to exploit the differential. Existing systems might need strengthening, but they are there already.

Ireland, as a whole, is a small place, and it would be easy to detect any increase in traffic through airports, or the limited sea ports. It is wholly unsuitable as a conduit for industrial strength tax avoidance. The government in Dublin want the border moved to the Irish Sea, keeping Northern Island subject to all existing EU rules, but since most of their exports to the EU pass through the UK mainland, they should concentrate their efforts on helping secure a tariff free outcome, which would largely solve the problem.

All tax systems suffer leakage; indeed there are some very cleaver people who devote their careers to exploiting the gaps, but in the Ulster Badlands, it is low level villainy which exists along every border, and certainly not cause to disrupt the trade talks.

However, any one of the 27 countries remaining could veto the talks due for December 14th, so this is the point of maximum political danger for the PM. And even if they do start, not a lot will happen in the rest of the month, and January, since it is holiday season.  March will then be upon us, with 12 months left to reach agreement, although if there is not substantial progress by then, companies in the eye of the potential storm will make their own arrangements. Uncertainty costs jobs, and political careers.

I am not sure what to make of the latest outpourings from the Donald, who seems increasingly unhinged, but he is proceeding as he promised, whether you like it, or not. The blog after next should be posted from there, if I can get this computer through the border controls, although my return on the 18th looks in doubt, American Airlines having given their pilots two weeks off, over the festive season, due to some computer glitch. I do not know why they carry on with this pretence, since planes are the original drones.

How refreshing, therefore, away from all these geopolitical problems, to find a pint of milk on my doorstep earlier this week, delivered as a goodwill gesture, by the local dairy.  And in a glass bottle, although not an option for the organic version, which comes in the wretched plastic.  Cheaper than the supermarket, this might take off.


David joined Manchester stockbroker Henry Cooke, Lumsden in 1977 and after becoming a member of the London Stock Exchange in 1984 held a number of senior positions within the firm including Managing Director of the in-house fund management company and member of the Executive Committee.

After senior appointments at Cazenove Fund Management and latterly Mercater Capital Management, David joined Mosaic Money Management in 2013. He has successfully managed private client and fund portfolios for over thirty years and has particular expertise in providing a multi manager service to his loyal client base.

The Financial Ironmonger is a hat-tip to Ironmonger Lane, the location of Chelverton’s London office.