The debate over a potential exit by the U.K. from the European Union requires a calmer approach than the current “fear projects,” said Helena Morrissey, CEO of Newton Investment Management.
Speaking at the Pensions and Lifetime Savings Association investment conference Thursday in Edinburgh, Ms. Morrissey said it was important to speak up and contribute to the discussion.
“From my point of view … (a so-called Brexit) is a very important issue for our country, and others as well.” Ms. Morrissey said attention is turning to what might happen to the rest of the EU were the U.K. to vote “yes” in a referendum June 23.
Ms. Morrissey warned, however, of the “fear project” over what would happen in the case of a Brexit. “I'm very pro-single market, pro-growth … but I do think we need to be thoughtful about the fact that this isn't necessarily a slam the door, storm off … very messy divorce.”
Rather, she said and borrowing a phrase from actress Gwyneth Paltrow, “we could have … a conscious uncoupling.” Ms. Morrissey highlighted that there would be a two-year window at least to negotiate with the European Council in the event of a “yes” outcome, and she subscribes to a scenario where the U.K. could “survive and thrive” in the case of a Brexit. The window gives time to consider regulations and rules that the U.K. would want to adopt.
Ms. Morrissey also took the opportunity to talk about the need for the industry to speak up and influence issues around climate change. “It is about gripping the issue that we can see coming down the road, and let's not wait until it hits us.”
But Ms. Morrissey's single biggest concern is the risk of a “big policy mistake.” She highlighted that with it being the seventh anniversary of the S&P 500's bull market, that market was “built really on a giant experiment, giant monetary policy experiment,” from low and negative interest rates, and quantitative easing.
“Our worry at Newton is that this may turn out … to have massive unintended consequences,” and might serve to stoke deflation. “In many countries, if you are a debtor you are paid to borrow, if a creditor you have to pay someone to lend them the money. (It is a) quite extraordinary, Alice in Wonderland experiment.”