A couple with a first baby sought my advice: they had accepted a low offer for their cramped London flat and bid the asking price for a nice house in commuterland. But they need a bigger mortgage and if Brexit leads to a property crash, they could face negative equity and financial stress. Should they call the whole thing off?
Emphatically I said they should not: buying a family home is a long-term choice, rarely regretted, in which fluctuating value matters far less than whether you love the house and whether (as in their case, I gathered) income is sufficient to support the mortgage. Conventional wisdom, perhaps, but I’m pleased to see the nation thinking the same way: the property website Rightmove reports a 6.1 per cent year-on-year surge in agreed sales in the month to mid-August, with rises of up to 10 per cent in the east and north-east, with many buyers pressing for completion before 31 October.
It’s the way to go, kids: just get on with your lives. We’ll never know how Brexit changes the future because we’ll never know the counterfactual — but you’ll make your own luck by your own decisions and you’ll always regret a hesitation.
Europe’s sinking banks
To add to last week’s list of negative signals in the global economy, European bank shares have collapsed back to levels last seen during the 2012 eurozone debt crisis, reflecting recession indicators in Germany and elsewhere. Their problems, we’re told, are not about solvency — most banks have been adequately recapitalised and passed their ‘stress tests’ — but limp profitability at a time when the European Central Bank is highly likely to cut interest rates again as a stimulus measure, while hard-pressed corporate customers are not borrowing to expand. US banks look stronger and markets value them higher: so should they cross the Atlantic hunting for cheap acquisitions? History will surely remind them that that has never been a good idea.
A different Hong Kong
I’m watching Hong Kong with trepidation, having lived there 30 years ago when popular fears of what China might one day do to the then British colony were aroused after the Tiananmen massacre in Beijing. If today’s pro-democracy protestors provoke the closet Stalinist Xi Jinping to a hardline reaction, the economic fallout will be as severe as the human consequences will be tragic. Even if it doesn’t come to that, we have just seen in the ousting of Cathay Pacific Airways boss Rupert Hogg what may be the beginning of the end of Hong Kong as a freewheeling international business centre.
Cathay is 30 per cent owned by Air China and dependent on Hong Kong as an operating hub, but it’s ultimately controlled by the billionaire British Swire family, who have assiduously built relationships in Beijing (more successfully so than their rivals, the Keswicks of Jardine Matheson) but are still labelled, as in one report this week, ‘a symbol of Hong Kong’s colonial past’. After some Cathay aircrew were allegedly involved in the protests, a ‘safety alert’ from China’s aviation authority prompted Hogg’s exit and a sharp fall in the airline’s share price — swiftly followed by a statement from its parent Swire Pacific (also Hong Kong-based) condemning street violence and expressing support for government efforts to restore order. Kowtowing, in other words: expect much more of that from other businesses rooted in the territory — while those that are not reconsider their commitment to a police-state Hong Kong.
The takeaway society
When I said last week that a paucity of deals indicates falling economic confidence, I had not overlooked the £9 billion merger (-barring rival bids) of FTSE 100-listed Just Eat with Dutch-base delivery service Take-away.com, which between them handled 360 million food orders in the UK, Europe and Canada in 2018. I had spotted it, but the truth is it made me even more depressed about economic prospects. Here’s why.
I’m grateful to Derek Thompson, writing in the Atlantic, for the news that in 2015, Americans for the first time spent more in restaurants than in grocery stores and that by next year, more than half of their restaurant spend will be ‘off-premises’ on take-aways and deliveries. Online orders via the likes of Uber Eats are already rising towards 10 per cent of the US restaurant trade.
And all these trends are crossing the Atlantic, conjuring visions of a generation of people who can no longer be bothered to buy and cook raw ingredients; who prefer to order in, oblivious of the food miles and labour practices involved, and stay slumped in front of the energy-consuming screen through which the order was placed. Maybe the £9 billion of value ascribed to Just Eat and Takeaway will be £12 billion by next year, or maybe some slicker competitor will have wiped them both out. But a pile of capital that might have fertilised something worthwhile will have been directed towards a sector whose growth symbolises nothing more than a society that can’t be arsed.
Sunshine and solace
Here in France, news reports offer yet another signal of growing unease, or so I interpret it: a dramatic rise, after ten years of decline, in the number of pilgrims heading for Lourdes and hoping for miracles. Personally, I prefer the worldlier solace of sunlit restaurant terraces where bargain-priced lunches with talkative friends represent economic stimulus in several senses. I shall return from my month in France bursting with creative energy; I have contributed a portion of trickle-down to local businesses and their suppliers; and I have found astonishing value despite the fallen pound: this week at Marminiac (Dordogne), a €13.90 feast of gazpacho, quiche Lorraine, slow-cooked lamb, and coconut dessert, in a village eaterie whose name no English visitor will easily forget: Aux airs de Fanny.