By Richard Pickering, Head of Futures Strategy
Alignment and autonomy As Theresa May pronounces a deal on Stage 1 of Brexit, many are left wondering what has actually been agreed. This hinges on Ireland, but cascades into much wider matters. The solution to the Irish problem appears to be a ‘full alignment’ with the rules of the customs union and single market. This neatly avoids the need for a hard border or cutting off Northern Ireland from the rest of the UK. There is, however, a problem. As Ed Miliband queried in Parliament on Monday, how does the PM reconcile her promised regulatory autonomy, with the agreed regulatory alignment? Or as Nigel Farage put it, ‘It’s not Brexit’. Whilst acknowledging David Davis’s repeated comment that nothing’s agreed until everything’s agreed, it now seems that the UK is on course for a soft Brexit. The markets should be happy, relative to the harder alternative; but one wonders if the electorate will be? Presumably not the Brexiteers who want emancipation from EU structures. Nor presumably the Remainers, who will wonder why we are giving up influence in Europe, for seemingly no change.
Productivity possibilities A new report commissioned by Vodafone quizzes employees about their productivity at work. It might come as a surprise to those passing construction sites to learn that constructive workers gave themselves the highest productivity rating. The fact that there is visible progress when one constructs a building might assist this view? The factor which was most highly rated in enabling productivity was flexible working policies (71%), with team and ‘belonging’ factors also ranking highly (64%), especially with a younger generation (74%). Supporting both factors is the technology which facilitates remote team working and working on the move. The report offers suggestions of ‘establishing an ‘anywhere’ office’ and ‘creating local hubs’ to avoid having to travel to the centre of big cities every day. Quoting an LSE report on a similar subject, it concludes: ‘Combining a rethink around technology, working practices and management practices can increase productivity by as much as 20%’. As the link between office design and productivity becomes more measurable, so should we start to see a widening pricing bracket between those that support productivity and those that don’t.
Centres of competition The two big M&A deals announced in the past week (Hammerson/Intu; Unibail Rodamco/Westfield) have got the market talking. However, the former likely remains subject to enquiry by the Competition & Markets Authority (CMA). What might this look like? As markets such as real estate consolidate, so competition decreases and the opportunity to sustain high profits increases. The CMA is tasked with considering cases where there is a substantial lessening of competition due to the merger of large enterprises. The geographic test is relatively broad (typically the effect must be substantial at no less than at city level); hence most real estate deals fall outside. However, the exception is shopping centres, where just a few large assets can be regionally dominant. In making their assessment, the CMA will look at substitutability (do the merged assets genuinely act in competition with each other), and in the past they have considered the impact on both tenants and shoppers. Remedies might include the forced sale of some assets where common ownership is deemed anti-competitive.
Death-bots We live in an increasingly data hungry world that seeks to avoid the biases and heuristics of human decision makers. It should perhaps therefore not come as such as surprise that ‘Alisa’, an artificial intelligence created by Russian tech giant Yandex has been backed by 40,000 people to succeed Vladimir Putin as Russian President. In trials to-date, Alisa has expressed views that enemies of the people should be shot, and when queried on this confirmed that, ‘soon they will be non-people’; underscoring her centrist credentials in Russian politics. On a world stage, she might find herself sparring with other prominent AIs including the gung-ho Siri (who when asked when the world will end, responds, ‘Right after you hear the words, ‘fire it up!’), and Microsoft’s genocidal ‘Tay’, ‘Chill, I’m a nice person! I just hate everybody’. Did we learn nothing from the Terminator films…?