Tony Ward is chief executive of Clayton Euro Risk
It’s been said that the reason why grief is such an exhausting and all-consuming process is that the human brain is effectively redrawing its internal model of the world.
Where once a loved one stood at the heart of everything, the death of that person means the survivor’s brain has to remake billions of neurological connections in order to create a new model of the universe without that individual present. It’s this Herculean mental effort that makes grief so over-whelming and lengthy.
I suspect there are an awful lot of people in the UK feeling something like grief right now: the 48% who voted ‘remain’ and the others who voted ‘leave’ in the belief that surely it wouldn’t happen. Surely.
Right now, we’re at the moment of maximum self-doubt. Behind us lies the increasingly attractive embrace of the European Union and all its knowns; ahead of us lie unknowns and uncertainties. The UK is setting out on a road along which no other country except Greenland has travelled. There can be little certainty in that – and it’s that inherent uncertainly and its attendant risk that will propel the markets to react negatively in the days and weeks ahead. Make no mistake, as I stated in my last blog, the first few miles along this road will be exceptionally bumpy – and what lies beyond the brow of the next hill is anyone’s guess. The media is going to be full of stories screaming the implications of the referendum result – some predictable, some from left-field. But remember this: the foundations and fundamentals of the British economy are unchanged.
Take for example house prices. According to most recent comment, analysts expect house prices to fall by up to 5% in 2017 and a further 5% in 2018 ‘based on the best-case scenario of a relatively orderly adjustment to our new political realities’.
While I accept in the short term that much of the potential fall in house prices will depend on the confidence of buyers in the coming months, based on how much Brexit affects the economy, I can’t see this affecting house prices long term. I’ve said this before but the fundamentals remain the same; demand for houses outstrips demand by a long chalk and ultimately I believe this will stop any house price crash.
Barratt’s boss David Thomas said he drew confidence from the ‘structural undersupply’ of houses in Britain which needs about 250,000 new homes a year while little more than 140,000 were produced last year.
As business leaders and decision-makers, our focus has to be on the journey ahead. Engaging in vitriolic blamestorming may satisfy some need to haul a villain into the village stocks, but it does little to restore confidence or focus our energies where they can have a positive impact. Our priority now should be to reduce uncertainty at every possible turn.
So while each new revelation will lead some in the business community to shout afresh each time, bemoaning the lack of foresight and preparation, the key is to remain focused on the bigger picture. Anyone who has managed their way through a major crisis knows that while each day presents a panoply of rumour and counter-rumour, fact and opinion-dressed-up-as-fact, it is the overall direction of travel that matters, not the small diversions.
So as we adjust to our new reality, take time to separate the meaningless shouting from the quiet voices of reason. Common sense and an ability to see beyond the headlines combined with solid business acumen may well be our greatest assets in what is to come.