Proactive Investors - Run By Investors For Investors

Theresa May Snap Election Call Is Right for Brexit Britain

Theresa May Snap Election Call Is Right for Brexit Britain

Theresa May Snap Election Call Is Right for Brexit Britain
Here is the opening of today's main story, from the Financial Times:
Even by her Sphinx-like standards, Theresa May’s announcement of a snap general election was a well-kept secret. It was also an abrupt reversal: since entering Number 10 after the vote for Brexit, the UK prime minister has insisted repeatedly there was no need for an election before the scheduled date in 2020. Nonetheless, this is the right decision.

Britain is embarking on the most important constitutional change in its postwar history. The Brexit negotiations, set to begin in earnest after the French and German elections, will be tough, and they will require trade-offs that many voters will find hard to accept. Since triggering Article 50, the government has shown welcome signs of realism — recognising that business needs a transitional period when Britain leaves the EU and acknowledging that many jobs cannot be filled without migrants.
A strong mandate will help Mrs May to remain on this pragmatic course. It lessens the risk of her being held hostage at every stage of the negotiations by minority pressure groups. With polls giving her Conservative party a 21-point lead over the dysfunctional Labour opposition, she appears likely to win by a landslide.
The prime minister is disingenuous, though, to claim the election has become necessary because of “game-playing” by opposition parties. In fact, resistance has been lame to the point of culpability. Mrs May wants to avoid the fate of her predecessor John Major, whose authority was destroyed by Eurosceptic rebels. Today, a growing number of pro-Brexit zealots are clamouring for a crash exit from the EU rather than Mrs May’s vision of a “deep and special partnership”.
How she chooses to interpret these words if and when she is handed a commanding majority is unclear. Mrs May was notionally against Brexit before last year’s referendum but is now a committed advocate. The decision to call a snap election is intended to free her from unwanted interference from the Remainers among her MPs, just as much as from hardliners on the right.



David Fuller's view
This is a welcome move by Theresa May and her reasons are certainly not “disingenuous”, as suggested two paragraphs above.  She needs her own election victory and a strong majority to represent Britain most effectively in the important Brexit negotiations with the EU.
While the PM favours a mutually beneficial Brexit Agreement, this may not be possible, at least initially.  The EU is a troubled, protectionist organisation, determined to extract the highest possible price from any country which decides to leave.  Therefore, instead of negotiating in line with the EU’s extortionist terms, Mrs May must be prepared to walk away (effectively, hard Brexit) before a sensible new trade relationship can be agreed.
It would obviously be more difficult to do this with a slender overall majority of 17 seats, as EU Brexit negotiators certainly know.  Currently Conservatives have 330 seats, Labour 229, Scottish National Party 54, Liberal Democrats 9, Democratic Unionist Party 8, Independents 4 and Sinn Fein 4.
Of the Parties currently holding less than 10 seats, my guess is that Liberal Democrats will see the biggest percentage gain, attracting some protest votes from disillusioned Remainers. The others could gain a seat or two, at best, as could UKIP or the Greens.  I think seats held by the Scottish National Party will decline below 50 in a rebuff to Nicola Sturgeon.  Divided Labour will see the biggest losses, falling well below 200 seats.  Conservatives are likely to have a significantly increased majority approaching 400 seats.
(See also: Theresa May announces snap general election on June 8 to ‘make a success of Brexit’, from The Telegraph)



Europe Drove Turkey Towards an Autocrat. We Cannot Now Turn Our Backs on His People
Here is the opening and also a latter section of this perceptive column by William Hague for The Telegraph:

From opposite corners of our continent, Britain and Turkey have for some decades shared a similar perspective on the European land mass between us. Both have looked to Europe to boost their prosperity and, through NATO, to reinforce their common security. Both have an imperial past and a strong sense of independence, but have tried to find a way to work within the EU nonetheless – Turkey by applying to join it as long ago as 1987.
A Europe that could have held on to Britain and accommodated Turkey in its ranks would have contained crucial gateways to both the transatlantic world of the west and the Muslim and Asian worlds of the east. Indeed, the great vision of a fully democratic Muslim nation becoming permanently anchored in Europe was what motivated British politicians to support EU membership for Turkey. This was a great strategic prize – the answer to any ‘clash of civilisations’, the proof that Islam and Christian democracies could join together, and a way of forcing the EU to be broad and decentralised at the same time.
Yet now the EU is not only losing Britain. Sunday’s referendum result and the events of recent years mean it has lost Turkey as well. Albeit by a very narrow margin in a referendum in which airtime was systematically denied to the opposition side, Turkish voters approved a new constitution giving sweeping powers to President Erdogan and set their country clearly on the path to becoming an autocratic and probably authoritarian state.
To any outside and friendly observer, this is not good news. As foreign secretary I made more visits to Turkey than I can remember, worked closely with ministers in Ankara, encouraged their aspirations to join the EU alongside us, and admired the revival of the Turkish economy and an outward looking foreign policy in the early years of Erdogan. But now, on the back of a failed coup used as a reason to purge and arrest tens of thousands of opponents, the same man is leading his country down a dead end of intolerance, division and repression.
The result will be a weakened economy, as international confidence in the rule of law is diminished. Even worse, the concentration of such power in a more centralised state will make it harder to reconcile the many divisions between Turks who happen to be secular, or religious conservatives, or Kurds. Tens of thousands of people are in jail for political reasons, media outlets are ruthlessly intimidated, and a 51 per cent victory will now be treated as a mandate to implement everything the President desires. Excessive faith is being placed in one man, who shows all the signs familiar through the ages of having too much power for too long: paranoia, extreme sensitivity to criticism and the destruction of all potential successors. Few countries have ever become prosperous or happy places on the basis of such rule.
This prospect is deeply disheartening to Turkey’s friends abroad. But it cannot be dismissed as just a random event brought about by one man and his cronies. The result in Turkey tells us some things that are very important about where the world is heading.
And:
A final lesson is that Europe’s collective mishandling of Turkey has been tragic. Year after year vital parts of Ankara’s accession negotiations were blocked, usually in Paris, Athens or Nicosia. Turkey was kept at a distance and obstructed in its efforts to become a European state, until eventually it has turned away, disillusioned and contemptuous. The EU could have embraced Turkey, just as it could probably have kept Britain as a member if it had been prepared to make compromises on migration. It lacks the collective will to do what is necessary for its own success.
The result of the referendum should therefore not be seen as Turks taking leave of their senses for reasons of their own, but as one manifestation of wider trends and failures, in their country but also around them. And that also means we must not turn our backs on them. They remain pivotal in resolving the war in Syria, and in attempting to manage flows of migration that seem destined to grow much larger. They are a vital ally and sit in one of the most strategically crucial points of the entire globe.
Even though they have voted to place their faith in one man in a way that British people think we never could, we still have a lot in common with the Turkish people. We should be sad for them this week. But, for the long-term, we should keep open to them our trade, alliances, understanding and friendship.



David Fuller's view
A more business-savvy EU might have accepted Turkey but that never seemed to be a realistic possibility.  Erdogan won’t be there forever and I agree with William Hague that the UK should take a long-term view on Turkey, by reaching out to maintain an alliance based on understanding, friendship between our two countries and trade.  Erdogan might well respond, given David Cameron’s previous efforts and also Brexit. 
A PDF of William Hague's column is posted in the Subscriber's Area.



Trump Congratulates Erdogan on Referendum as Europe Seethes
Here is the opening of this topical article from Bloomberg:

President Donald Trump congratulated Turkey’s President Recep Tayyip Erdogan on his referendum victory, a sharp departure from the critical reception many European officials have given the vote to expand Erdogan’s powers.
The Turkish leader stepped up his vitriol against European critics on Monday, telling a crowd of supporters, “We don’t care about the opinions of ‘Hans’ or ‘George’ or ‘Helga’.” All debates about the constitutional referendum “are now over,” he said.
European officials have deplored the concentration of so much power in one person’s hands, and the Organization for Security and Cooperation in Europe has faulted Sunday’s election process. The vote fell under suspicion because ballots that didn’t carry an official stamp were allowed to be tallied. The approval of expanded presidential powers won by a narrow majority of 51.4 percent.



David Fuller's view
It appears that Trump holds a similar view to Hague on Turkey and also the EU.  I am sure this has been noted by both Prime Minister Theresa May and Foreign Secretary Boris Johnson. 



Email of the day
On compulsory military service:
Dear David Have only just caught up with Roger Bootle's column re: Defence Spending, and your comments. Was particularly interested in your suggestion re: 2 year military service as I am old enough to have done National Service 1953-55, in Egypt and Cyprus. At that time there we had 80,000 men "guarding" the 99 mile long Suez Canal, while the UK had many other worldwide military commitments and had been heavily involved in the Korean War. I believe that the estimated TOTAL size of our army within a few years will be - below 80,000! Apart from financial constraints the Army is facing a severe recruitment problem. I suggest this is partly to do with the lack of support that soldiers receive after discharge. A significant number finish up on the streets and in prison. The meagre government aid available to these heroes is clearly insufficient, and it is left to charities like "Walking With the Wounded" and "Help for Heroes" to try to bridge the gap. I commend them to your readers. With best wishes



David Fuller's view
Thank you for this thoughtful email, which will certainly be of interest to many subscribers, not least those of a similar age.  A country can always do more to help solders who have suffered fiscal and mental injuries in battles. This should be a priority, in my opinion.  Government support is essential but it is also a national effort, involving charities and businesses.  Prince Harry’s efforts on behalf of wounded soldiers are both a credit to the Royal family and a testimony to his character.

The information provided on this website (www.FTMoney.com) is for the purposes of information only.  This website and its content is not and should not be considered or deemed to be an offer of or invitation to engage in any investment activity.  Nothing FT Money does and nothing on this website is intended to operate or be construed as the giving of advice or the making of a recommendation by FT Money to any investor or prospective investor.

FT Money and any other group or associated company of it is not authorised or regulated by the Financial Conduct Authority in the UK or any other regulatory body in any other jurisdiction.  

By means of your login to our service you are deemed to thereby accept our current Terms of Business including this notice,

Except for permission to download a single copy for personal use, the research published by FT Money may not be reproduced, distributed or published in whole or in part by any recipient for any purpose, without the prior express consent of FT Money.

Information featured on the website is based upon information and data provided by FT Money and remains the intellectual property of FT Money.  Some of the information may also be provided by third parties and whilst FT Money will seek to ensure that information featured the website is updated on a regular basis, FT Money does not accept any responsibility for, and disclaims any and all liability for, any such information (including the accuracy of such information) or views or opinions expressed on the website. 

Any person considering an investment opportunity as a result of data presented on the website should give full regard to all the content of the website, and should perform their own due diligence and obtain advice from suitably qualified professional advisers before investing.  Prospective investors are also encouraged and recommended to take their own independent legal and taxation advice together with any other advice that they may consider necessary to consider the benefits and risks attached to any investment opportunity.

No representation or warranty, expressed or implied, is or will be made or given by FT Money  (including its executives, employees, agents, contractors and advisors) in relation to the accuracy or completeness of the contents of the website, save that any such liability is not excluded in respect of fraudulent misrepresentation.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use