High hurdles What could be simpler than invoking Article 50? Seemingly most things, as more and more new hurdles appear in front of the starting line. The unexpected Supreme Court hearing on 7 December is only the start of a race, which may well pass through the European Court of Justice. Such a referral could take months (ave. 19.7 months or 2.2 months for an ‘urgent preliminary hearing’), with no guarantee of success. Meanwhile the regional assemblies in Scotland and Northern Ireland are likely to attempt to delay matters further, with the potential for a vote in the Commons and then the Lords. And that is only to get us to a position where we can serve the divorce notice – on the EU. Another soon to become famous provision is Article 127 of the EEA, which we might also have to invoke, with potentially similar issues, to leave that bloc. Back at home, Tony Blair believes we might not yet leave the EU, John Major warns of the ‘tyranny of the majority’, and Theresa May looks to God – as well she might.
Is Le Pen mightier? A wave of right-wing populism is sweeping the globe. Could this be the West’s equivalent of the Arab Spring? Previous fringe politicians are now serious contenders, with Marine Le Pen the latest to be thrown into the spotlight. Le Pen, now 12/5 to win the French presidency, had an implied win probability of only 12.5% at the beginning of last year. For Donald Trump the same figure was 2% just over a year ago. Expectancy Theory suggests that one is more motivated to vote when the prospect of success is tangible, and closet National Front supporters buoyed by Trump and Brexit may yet surprise the French electorate. Le Pen would offer an EU referendum. If successful this would surely by the end of the EU, with Nexit and Czexit to follow. However the pro-EU French are still unlikely to let this happen.
Khan’s Cabinet Sadiq Khan’s Business Advisory Board, will comprise 16 members, (63% women). In what might be interpreted as an indication of the Mayor’s priorities, the financial services sector is comparatively under-represented relative to its current contribution to London’s economy. Comparing the appointments with central London’s office take over the past 5-years, however, Finance is perfectly represented (19% of take-up; 19% of Board), whereas Media & Tech is massively overrepresented (24% of take-up; 44% of Board). This is perhaps testament to the growing importance of Tech to London’s 5-year plan, as Finance comes under pressure from Brexit and digital automation.
Defrosted Ahead of plan, Aviva Investors has reopened its Property Trust, marking a close to the era of suspended retail funds following the initial Brexit shock. Having sold 11 properties totalling £212m, the asset manager will unfreeze trading on 15 December in time for Christmas. Prices achieved were reported as being ‘broadly in line with market valuation changes since the EU referendum’. (IPD has moved down 3.5% over this period). Aviva had planned to reopen the fund in Q1 2017; however, improving sentiment, stabilising values and healthy levels of liquidity are cited as positive factors supportive of reopening. Noting that the property market still faces headwinds, its position relative to more volatile assets means that real estate looks ‘priced favourably’, according to the fund. The spread of City yields over 10-year government bonds is currently c.3.0%, whereas in 2006 it was negative c.0.5%.
Richard Pickering, Head of UK Research & Insight.