Opinion: Ian McConnell: Johnson and Cummings need to see UK as others do and fast, as Brexit fiasco rolls on

What makes it likely they will not wish that “wad some Power the giftie gie us/ to see oursels as ithers see us!” is that Brexit is, of course, an ideological drive. And Mr Johnson, his adviser Mr Cummings et al appear to favour the promotion of Great British patriotism over identifying mistakes and putting them right.

However, as Burns observed astutely, being able to see oneself as others view you can “frae mony a blunder free us/ an’ foolish notion”.

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The words of To A Louse came to mind, and not for the first time in the context of Brexit, after reading the views of veteran fund manager Bruce Stout, senior investment director of Aberdeen Asset Managers, on the relative lack of attractiveness of the UK stock market in a global context.

These observations, as well as examining the fallout from the coronavirus pandemic in the UK, crucially also weighed the impact of Brexit on the relative merits, or otherwise, of the country from an investment perspective.

Mr Stout’s comments came in the half-year report of the £1.535 billion Murray International Trust, which he manages.

Murray International reported it had underperformed amid the global stock market volatility triggered by the pandemic.

The trust posted a negative total return on net asset value of 10.7 per cent for the six months to June. There was a negative return of 4.7% on its chosen reference index for global equities.

Mr Stout’s forthright comments came in the context of his analysis of the trust’s performance.

Noting the Organisation for Economic Cooperation and Development’s projections for UK gross domestic product and the Brexit situation, he said: “Low exposure to the UK proved insufficient to protect overall capital and income from this ‘region’. Emerging from lockdown towards the end of June, facing 2020 OECD forecasts of double-digit [percentage] GDP contraction, the market has been brutally impacted by significant capital losses and the largest dividend declines of any global stock market. Ongoing uncertainty over future profit growth and dividend prospects as well as fraught post-Brexit trade negotiations provide a compelling case to remain cautious of the UK.”

Mr Johnson and his Cabinet colleagues, and Mr Cummings for that matter, should really reflect on these comments, particularly the view that the current situation, including the Brexit turbulence, amounts to “a compelling case to remain cautious of the UK” in terms of investment.

After all, this is broadly the opposite of the message coming from the UK Government, with its ‘The UK’s new start: let’s get going’ slogan for its public information campaign around Brexit.

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The comments from Mr Stout were timely, coming just days ahead of a resumption this week of talks between the UK and EU on the post-Brexit relationship.

Of course, the Conservative Government and some Brexiters will never tire of telling you that Brexit has already occurred. That they got Brexit “done”, as Messrs Johnson and Cummings had promised.

Brexit did of course occur, on January 31, but only in a technical sense. The UK has so far been spared the grim effects, in terms of the loss of truly frictionless trade with the world’s largest free-trade bloc and the ending of free movement of people and with it all the economic and societal benefits this brings, by the transition arrangement.

This arrangement runs out on December 31. And, for reasons best known to itself, the UK Government has refused to extend it even as countries around the world have to devote huge effort to dealing with the human tragedy that is the coronavirus pandemic, and the economic fallout from this.

It has, on the Brexit front, been blunder after blunder from the Conservatives for years now.

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These blunders began when former prime minister David Cameron decided to hold a referendum on EU membership in the first place, seemingly goaded into this by the right of his party and the likes of arch-Brexiter Nigel Farage.

Mr Cameron, who preferred Remain, lost, as those on the right of his party who have for decades favoured European separation, in tandem with others, somehow managed to persuade voters that the woes they had suffered in the wake of the 2008/09 global financial crisis were the fault of the EU. The woes, of course, had nothing to do with the EU. But they were caused by Tory policies, crucially the grim austerity plan and the slashing of benefits for those in and out of work.

We seem a long way from the days of New Labour’s Cool Britannia efforts, in terms of how other people view the UK.

There has been plenty of anecdotal evidence that, with its Brexit drive, the UK is viewed by a significant number of mainland Europeans as something of a laughing stock.

In terms of the perception of the UK stock market, Mr Stout is certainly not alone in his view of its relative unattractiveness.

Baillie Gifford partner James Anderson, co-manager of the £10 billion-plus Scottish Mortgage Investment Trust, told The Herald in June as he mulled the rapid rate of global technological advances: “I am probably more pessimistic now than I have been about the British stock market’s ability to throw up companies that are able to participate in this extraordinary pace of change.”

Mr Anderson declared: “I think it is quite surprising to be honest. I think in a way that has got worse.”

Citing the leader of California-based electric vehicle, battery systems and solar power pioneer Tesla, Mr Anderson added: “I don’t see an Elon Musk around, do you?”

As an aside, it is worth noting that Mr Musk cited Brexit-related uncertainty last November as a reason why Tesla was not setting up in the UK.

Mr Musk, after unveiling plans last November to build a European electric-vehicle plant for Tesla on the outskirts of Berlin, told Auto Express: “Brexit made it too risky to put a Gigafactory in the UK.”

Scottish Mortgage’s exposure to the UK stock market has reduced dramatically in recent years. The UK accounted for just 1.7% of total assets at March 31, down from 46.1% 15 years earlier.

Asked at the start of June how he believed Brexit would develop, and whether he thought a trade deal would ultimately be agreed between the UK and EU, Mr Anderson replied: “I am quite pessimistic as I still think we are approaching it with a fairly great degree of arrogance and an inability to recognise where power lies in this relationship.”

However, reiterating Scottish Mortgage’s very small exposure to the UK stock market, he added: “Our policy isn’t determined by that. We have such little exposure to Britain. It is not a big issue for us.”

It is worth reflecting on what Mr Anderson had to say about Britain and Brexit back at the start of June, notably the point about the “fairly great degree of arrogance” from the UK side.

There has been round after round of tortuous talks between the UK and EU since then.

However, this point about an arrogant approach, looking at the mood music as the UK embarks on yet another round of talks with the EU this week, appears even more fitting than it did at the start of June. And that is saying something.

At stake in these talks is an opportunity to mitigate the damage from Brexit, which sadly will be huge in any case, by winning a free-trade deal with the powerful European bloc.

This is a consolation prize but an important one.

Mr Johnson, his Cabinet, and Mr Cummings need to have a good think about where the UK actually fits on the world stage, and recognise the importance of the EU bloc to the country’s future, before it is too late.

That, of course, assumes that they are interested in mitigating the hugely detrimental effects of Brexit on the UK economy and on the living standards of many millions of ordinary people, including Remainers and those fooled into voting for Brexit.