A little over what feels like a very long year ago I wrote in Private Equity International my own case for Remain. More disagreed than agreed.
In private equity we are used to working in teams, accustomed to not getting our way, and trained to play the hand we’re dealt. Who hasn’t ending up making an investment they would have preferred not to? Or failed to get one on the books they had liked? We get on with it. What matters in our jobs is tomorrow not yesterday, and the issue of Brexit is no different.
As a risk manager, I still prefer the up/down of Remain versus Leave. But (after a fortnight of kicking the cat) I am no longer the guy at the water-cooler bemoaning that deal we should have done back in ’93. What matters now is the next node not the last one. If we take the right steps from here the future is still bright and no one will be happier than me if Leavers can one day say “I told you so”.
And it is in this respect that I struggle with the “hard/soft” dichotomy to which this discussion has been reduced. As an ex-Remainer people assume I now advocate a “soft” exit. And in an ideal world, I would. But it isn’t an ideal world, and making decisions as if it were, whether in politics or investing, is for the ivory towers.
“When we are appraising investments we don’t start with the answer. We do due diligence.”
So I put this challenge to the Soft(est) Brexiteers: really? One of the few certainties in what is an opaque option set is that single market membership requires broad European Court of Justice jurisdiction, the free movement of labour and continuous budget contributions. People voted against many things when they voted Leave, but it is implausible to argue that those three things were not high on the list. We lost, they go, and it doesn’t advance the ball not to accept that.
And to the hardest Brexiteers I say: in all things moderation. Nothing is everything, no single value dominates all others. Is any element of ECJ influence, or any pound of budget contribution so offensive that it is worth the price of jobs and GDP, if that choice exists to be made? There will be trade-offs and, if there is a lot to be had for a little, I suspect that even the hardest of Brexiteers would not be so purist were it their finger on the trigger (or perhaps pen on the parchment is a safer metaphor).
When we are appraising investments we don’t start with the answer. We do due diligence, we identify risks, we quantify upside. We aggregate that and take a best guess – it’s only ever that – on what is the right thing to do.
And so it is with the Brexit negotiations. Deep market access is unambiguously a good thing, if it is at nil cost. No-one anywhere on the spectrum disputes that, so let’s not rule it out. But there is a point at which the cost is not worth paying, in terms of migration, ECJ jurisdiction and budget contributions. So nor can we rule it in. In the sound and fury and posturing precious few people are asking the right question: what is the price? Only by discovering that – through an open-minded dialogue over the coming 12 months with our soon to be ex-partner – can we decide if we want to pay it.
If we do we will, and in that case should, end up with a “soft” Brexit. If we don’t then it will be a “hard” departure, and rightly so in that scenario. But deciding which of those we want now would be like making an investment before due diligence. The simple fact is: we don’t yet know the price. Let’s find that out and only then mount the barricades. A hard or a soft Brexit? Just sensible, please.
Nick Campsie campaigned for Conservatives In and manages the illiquid equity portfolio for a global asset management company.