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Shuffle, Swoop and Switch

By Richard Pickering, Head of Futures Strategy

Reshuffle  New Year, new Cabinet. But is this a case of allowing ‘a new generation of gifted Ministers to step up and make life better for people across the whole UK’, or just shuffling the deckchairs on the Titanic? The big jobs (Home, Foreign, Chancellor and Health) remain unchanged, as does David Davis’ Brexit role. Jeremy Hunt and Justine Greening both flinched at the new roles they were offered, with the former having his original role restored and expanded (to include Social Care), and the latter resigning in protest. Any PR benefit that the PM may have got from the reshuffle appears to have bled away. Sajid Javid remains in charge of the now Ministry of Housing, Communities and Local Government (emphasis added) – ‘a name that reflects the fact that this government is absolutely committed to building the homes our country so desperately needs’. He kicks off the New Year with a review of Local Government finance and rates retention.

Service office swoop  Towards the end of last year, I set out a prediction for the growth of serviced offices, and a rise of M&A activity this year. Just before the Christmas break, Brookfield made an all-cash takeover approach for Regus parent, IWG. At its undisturbed share price, IWG commanded a P/E ratio of c.13, drawing comparisons with steamier tech-stock valuations of WeWork. A challenge to those seeking to enter this rapidly growing sector is how to achieve sufficient scale quickly and to avoid increasing competition for sites. Corporate acquisitions (such as Blackstone’s acquisition of The Office Group last summer) provide a route to achieve this. IWG, is a long established incumbent with over 3,000 locations in 1,000 cities.If Brookfield are successful in acquiring the business, they will be propelled into a leading position in this sector in the UK.

Visas  The issue of how EU citizens will travel to the UK following Brexit remains unsettled; however, a report issued by the European Research Group over Christmas proposes a £10 digital visa waiver system similar to the US’s ESTA process. This would allow quick access to those travelling for tourism or business, but would leave workers and would-be residents with more stringent processes. Meanwhile, notoriously closed China is proposing to open up new classes of 10-year visas achievable for free, at short notice, in an attempt to attract highly skilled migrants. Whilst there is no mention of surveyors, both Nobel Prize Winners and Olympic athletes are among those eligible. An earnings criteria suggests those with salaries of more than c. £60k might also benefit. At a time when the world is opening its doors to talent, the UK must remain attractive both from a legal and cultural standpoint.

Trial by democracy  Although Theresa May has attempted to ditch her ‘pale, male and stale’ Cabinet, the chances of the next UK Prime Minster being a boring career politician are still almost 100%. Even at the interesting 500/1+ end of the odds spectrum, we find politicians such as Tony Blair and Tim Farron. Not so in the US. Whilst reality TV star ‘The Donald’, remains favourite for reelection as President, he will now need to contend with chat show host Oprah Winfrey (whose odds have been slashed to 8/1, following a single speech at the Golden Globes), Facebook impresario Mark Zuckerberg (20/1), and wrestler-turned-actor Dwayne ‘The Rock’ Johnson (25/1). Even Kevin Spacey still has a shot (200/1). As Doc Brown noted about Ronald Reagan in Back to the Future, ‘No wonder your President has to be an actor. He’s gotta look good on television’. True modern democracy could of course be achieved by putting them all in a jungle, and voting intermittently on matters such as corporation tax cuts and who will face this week’s Bush Tucker Challenge.

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