Forget it, Theresa May... it's Chinatown
A hurting Britain is a lesser trading partner for SA, and less trade from Britain is just another problem SA needs to deal with this week...
Anyone that makes my country in the middle of a new recession look less chaotic by comparison is welcome to an article, but many may be wondering about my choice of title.
When I heard about the hung parliament results of the UK’s snap election, called for by the now somewhat egg-faced Theresa May, the famous Roman Polanski movie came to mind. It is not just the UK, but the world, that lately reminds me of the mythical ‘Chinatown’ that Jack Nicholson must face off against in the film – a place where any number of impossible things happen,where up is down and down is up and little makes real sense.
When Theresa May called for the earlier election date, Architas’ investment director Adrian Lowcock told thisismoney.co.uk that “politically, the timing might not get any better for the Conservative Party to win a general election”. May herself certainly seemed shocked when the results came in.
You can’t really blame her. She didn’t know the rules. This wouldn’t have happened to Maggie Thatcher. It wouldn’t even have happened five years ago, in a time before David Cameron's massive bluff was called and Britain voted to exit the EU.
But that was then, and the world has changed. The world now is characterised by the very things that used to be defined as minority occurrences: volatility, black swans, economic crises. It’s a mad world. It’s Chinatown.
As I write this I am sitting in my journalist’s day job at the annual MMI Holdings Directors’ Event at the Sandton Convention Centre, where Business Times editor Ron Derby shrewdly commented that “this morning Theresa May stands where David Cameron stood before her, asserting that the world is a crazy place.”
Just one spin-off of the election shocker was massive unpredictability on the foreign exchange chart
after UK results started trickling in. The GBP lost 2% value against the USD when the Asian markets
opened at midnight this morning CET, like some kind of Cinderella nightmare.
But enough about May, what about us?
In South Africa, as a heavily export-dependent economy, the first few hours after the hung parliament result spawned wild speculation and hand-wringin, as to what this would mean for Brexit. Would May step down? Would England revote about leaving the EU? In late 2016, Quartz Africa reported that “Brexit will be terrible for Africa’s largest economies”. Others disagreed, saying it would have little impact. So which is it?
Now, it sems to me, SA has received the worst possible result. Not only is May still in office (although for how long one cannot guess) but the GBP is suffering from the volatility the hung parliament result caused.
Brexit is not even the main point, in my opinion. Everyone seems to be forgetting that South African businesses were worried about Brexit because it might hurt the UK’s economy, and a hurt UK is a shyer trading partner for South Africa. Well, Brexit or no Brexit, Theresa May has just hurt the GBP anyway. With the With the UK representing almost 4% of South Africa’s global trade, that’s a problem.
But surely that's just one little country far away in another hemisphere? How badly could it affect the man on the street in SA? What could possibly go really, truly wrong?
Well, in my opinion, it’s Chinatown.