Johnson creates certainty, but it’s uncertain whether he can avoid the fate of Charles I

The markets hate uncertainty — and democracies are good at creating uncertainty. But then again, King Charles I suspended Parliament and things didn’t turn out so well for him.

Article updated: 29 August 2019 9:00am Author: Michael Baxter

Back during the English Civil War there were diggers and levellers. The diggers believed in getting closer to the earth, with common ownership of land. Their idealism was for a kind of agrarian utopia. They thought that England was living under a kind of Norman dictatorship, subject to a foreign ruling class.

The Levellers were more focused on creating greater democracy, such that the head of each household should be allowed to vote. Their influence exceeded that of the diggers and maybe their legacy was the creation of the British democracy we know today.

So, why do I talk about the English Civil War? Well, as far as I know, the last person to suspend parliament was Charles I. And thing’s didn’t turn out too well for him.

Not that Boris Johnson is anything like the unfortunate English King, for one thing Charles I wore a wig, whereas Boris has quite a different hair style.

But what we can say is that the markets don’t like uncertainty. In theory, that means they prefer dictators to democracy as countries which are ruled by a parliament have this pesky habit of changing their minds.

We also know that the FTSE 100 likes it when the pound crashes and it likes it for technical reasons. Many of the companies that make up the index do most of their trade in foreign currencies, therefore, if the pound falls, their profits rise when measured in pounds. Of course, the FTSE 100 only tends to rise when measured in sterling. The dollar or euro value of the index is not so good.

The FTSE 250, by contrast, doesn’t tend to cope so well with a falling pound.

Now we have certainty. It appears certain that the UK will leave the EU on October 31st. I doubt very much whether the EU will give any significant ground in negotiations. Either the UK will leave without a deal or the EU will concede some incredibly minor point related to the border on the island of Ireland, and this will be hailed by the UK government as a great victory, and Theresa May’s deal will be brought back, with just a tiny tweak. But I doubt that. I am not certain the UK will leave without a deal, but I am fairly certain.

All I can say is that it better work.

If, somehow, a Britain freed of the so called shackles of the EU can become great again, a kind of great Great Britain and Northern Ireland, trading with South East Asia and India like it was in the days of the Empire, entwined with the US like it has become the 51st state, maybe the UK will boom.

But I am not so sure. For many of the people who voted Brexit the reasons were wholly honourable and had to do with democracy and creating a more outward looking Britain. But I know that for others it was about a distrust of foreigners. I know this, because I encounter this view all the time. It feels as if every time I take my dog for a walk, I encounter someone, who takes me into their confidence, and talks about the evils of immigration — I must have a face that suggests I will agree with them.

Maybe it will all work out well, maybe Johnson, Duncan Smith, Rees Mogg and the saintly Farage are right, and Britain will boom, and we can all party for the rest of our days.

But if they are wrong, the wrath of the moderates, of those who like the levellers of the 17th century, hold idealistic dreams of fairness and decency, those who think Britain’s future lies as a kind of technology hub at the centre of Europe, those who believe that nationalism is an anethema, and don’t think much of Farage’s idea of nation...ism either, their fury will be hard to quell.

The causes of the English Civil War were complex. At one level, there was the clash between Catholicism and Protestants, but there were deeper forces. Charles I was a supporter of the displaced rural worker who had been a victim of enclosures and wanted to see land returned to those who once farmed for a living. The forces of Oliver Cromwell consisted of a coalition of a wealthy breed of early capitalists and entrepreneurs who had benefited from enclosures and many of the workers who had learned how to make a living in the rapidly growing towns and cities of a Britain on the cusp of industrial revolution.

Those who say it is silly to draw such an analogy don’t grasp how furious many feel over the latest developments — a kind of tyranny of a tiny majority.

But the real fireworks are only just beginning.

We are on the cusp of technological change the like of which we have never witnessed. We are entering a period of great opportunity and a period of danger too. If you are interested in this, I am working on a book on this topic, watch out for it.


These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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