How much of a big deal is Theresa May’s resignation? The answer to that will inevitably depend on what happens next.
For now though it seems as though markets have bigger fish to fry. In mid-day trading after the announcement came the pound was very marginally higher, after a torrid weak, and the FTSE was also up a tad.
So much for the domestic market in the UK.
Internationally, Mrs May’s departure is unlikely to make any serious waves. She will remain to host President Trump’s visit to the UK in June, and then she will be gone. And at that point the Brexit situation will either stay the same, or get worse. And the markets have been pricing both of those options in for years.
More significant in terms of prospects for the prevailing international economic order were this week’s purchasing manufacturers index (PMI) numbers from the US and Europe. They presented a fairly bleak picture, particularly in the US, where the decisions of purchasing managers appear to be at odds with the recorded performance of the economy.
The difference of course is that GDP numbers and growth represent only past performance, whereas the purchasing managers are looking solely towards the future in working out what stocks they will need when.
That both manufacturing and services PMI numbers fell significantly short of expectations this month has been taken as a sign that businesses are already tightening their belts in anticipation of a slowdown in exports as the Chinese-US tariff spat escalates into a full-blown trade war.
If that’s true then the stellar economic numbers that the US has been turning in almost consistently since President Trump got elected could come to a juddering halt. And as a consequence of that, the Fed may be forced into another ignominious U-turn in regards to its policy on rates.
Elsewhere, the picture is decidedly mixed too. Overall, European PMI numbers were pretty poor, although aspects of the German economy surprised on the upside after much doom and gloom during the new year.
The Eurozone economy as whole remains patchy and sentiment in general continues to be dampened by its vulnerability to shock. The rise of populism continues, as immigration policy Europe-wide remains in chaos.
The Italians, under the populist Five Star movement are pushing against the fiscal rules; the Hungarians, under that hate-figure for the left Victor Orban, continue with their nationalist rhetoric and were perhaps an inspiration to Donald Trump in their erection of a new physical barrier across their southern border; the Front National, now known as the Rassemblement National continues to gain respectability in France; Alternative fur Deutschland is on the rise in Germany; and Spain’s government continues to veer from left to right every other year.
How much this undercurrent of dissatisfaction can ever allow a stable foundation for a Europe-wide democracy to emerge is open to question, a question which the British, in their curmudgeonly way, have already largely answered, at least as regards themselves.
It may still be, as many have argued in the past, that the European Union is the best defence against a future European war. But in today’s hyperconnected and nuclearized world a war between nation states inside Europe seems an unlikely proposition, Union or no.
More possible, as the populists argue, is that the pressures of mass immigration start to cause social fabric to fray and that future conflict will be internal rather than national, between interest groups and/or ethnic groups.
It is fear of this possible future conflict which lies at the heart of the rise of populism - precisely because mainstream European politicians, hidebound by political correctness and the shadow of a war now more than 70 years in the past, do not address it.
It’s not rocket science. At least not to the voters.
So, while the US economy begins to suffer under the self-inflicted wounds of a trade war with China, and the Europeans labour under the leadership of myopic politicians, Britain sinks without trace away from the European Union and the departure of her Prime Minister barely raises an eyebrow.
The irony is that today’s retail figures from the British high street were very good, unemployment in the UK is at a 44-year low, the deficit is almost gone and austerity is coming to an end.
Considering the current political chaos, the British economy isn’t doing too badly.