Brexit – what does it mean for our industry and for UK business?

Hamish McRae

• Five great medium-term global shifts and …

• … their implications for the world of finance

• Three big questions about the future

People get consumers wrong …

There’s no chance that the iPhone is going to get any significant market share. No chance.

Steve Balmer, 2007

… and the economy wrong

I am 100 per cent sure the US will go into hyperinflation.

Marc Faber, 2009

The presentation's structure

• Europe’s place in the world economy …

• … its long-term trends and performance …

• … and its short-term outlook

• How far this changed by Brexit?

• What does this mean for our industry?

Some implications so far

• Europe is a huge market – but slow-growing

• There is general shift to the emerging world

• Thanks to demography, that shift will continue

• So is Europe becoming the new Japan?

Now the short-term outlook

• The entire developed world has suffered …

• … but much of the emerging world escaped

• But the recovery is fragile and uneven

• There would have been a downturn anyway

• How bad might it be for Europe in general?

• And how bad for us?

Thoughts about the cycle

• There is such a thing as the business cycle!

• This one was already mature …

• … and it is artificially supported

• But there is spare capacity and little inflation

• Some dip between 2017 and 2019 was inevitable

How does Brexit change this?

• It hits growth: say 1% off UK, 0.5% off Eurozone

• Some sectors – London property – take a beating

• But beyond 2017 everything is to play for

• What is the nature of the deal and the process?

• How quickly are other EU stresses tackled?

• Will the UK remain outward-looking?

And the hit to our industry?

• Technology trumps politics ...

• … this is nothing like the great financial crisis

• Communications technologies are global

• Britons are technologically sophisticated …

• … and if they have money they shop

• But first, let’s go to Rome …

Inauguration of Pope Benedict XVI2005

Inauguration of Pope Francis2013

What does this this mean for us?

• We need to counter the discourtesy …

• … and the segmentation of discourse

• Paradoxically, communications drive us apart

• So how do we talk across divides?

• How do we restore trust in experts?

• Will culture and identity trump physical proximity?

What does this mean for Europe?

• Brexit need not be a long-term disaster …

• … though of course in the short-term it is

• But a multi-speed Europe is both inevitable …

• … and preferable (soft membership for Russia?)

• How do politicians adapt a 60-year-old-model?

Europe’s future – one view …

The euro is our common fate, and Europe is our common future

Angela Merkel

Europe’s future – another one …

The UK is not going to leave the European Union. Of course not. We are inextricably wound up with Europe.

Nick Clegg

Europe’s future – and a third!

It's a European Union of economic failure, of mass unemployment and of low growth.

Nigel Farage

Brexit – what does it mean for our industry and for UK business?

Hamish McRae

• Five great medium-term global shifts and …

• … their implications for the world of finance

• Three big questions about the future