THE LEX COLUMN: The Brexit omnishambles
The UK can only fight back in equities
A US banker is offered a bonus to move to London or Paris. Eyeing chaos in the House of Commons and on Paris streets, she thanks her boss wryly. To help make her choice she uses Lex’s Inverse Shambles Ratio (ISR). The lower a nation’s rating, the greater its allure as a domicile and investment. Real estate is the first component. France wins. A lower population density leaves more space to enjoy. A square foot of housing, says CBRE, costs $617 in London and $593 in Paris. The latter is more sustainable. The full risks of a hard Brexit are not reflected in a UK standardised price/income ratio, which is 10% more expensive than across La Manche. Our banker then studies creditworthiness. Trader friends are nervous about both countries’ IOUs. French President Emmanuel Macron and UK chancellor Philip Hammond have been loosening their purse strings in hopes of quelling hostility. France’s fiscal deficit to GDP ratio will probably bust through the EU’s 3% ceiling in 2019. But closed EU/UK b...