I once heard a phrase that 'The cure is sent before the illness'.
Putting aside our personal political issues with the Brexit vote, from a purely corporate point of view, one of the biggest fears is the British pound’s decline to a 31 year low. Not being in business three decades ago, it occurred to me to ask the question “what was happening?' during that time. I found out that in January 1985 the pound hit a low of £1.05 to the dollar. Looking at this historical data does fill a certain level of confidence that actually the UK is fundamentally a strong economy and things will bounce back. One of the UK's greatest assets is the legal system, which is why international investors have felt confident to put their money into London and the UK rather than other international countries, where the legal system is not as unpredictable or likely to change.
Short-term VS Long-term Operators
Brexit is really posing challenges to some companies. Many corporates who have big deals have put these on hold and one has to question their vision and long-term strategy when they make such rash decisions.
In Japan, business plans are made with a 100 year vision which means that they know that most of the people running the business today will not witness the outcomes of their employees. I believe it is in these markets where we see that the balance between capitalism and greed starts to be understood. The idea of capitalism and people going to work to better themselves, their communities and environments is very healthy, worthwhile and builds self-esteem not only for the individual but for their teams, families and communities too. However with short-term greed, as exciting as it can be, often comes with a long-term consequence. We only need to look at the 2008 housing market crisis in the US to see the devastation caused by Wall Street in those years (for anyone who hasn’t seen the film The Big Short, it is highly recommended).
There are two landlords we are aware of with whom you can see the difference between healthy capitalism and inconsequential greed. Soho Estates, founded by the late Paul Raymond has a strategy of nurturing steady growth of an area such as Soho and this company has relationships with their tenants, with the council and the local residents and genuinely has a long-term strategy without having to appease the stock market, investors or any funds hence why we as a business have just signed a lease with them in Soho.
On the other hand just half a mile away in Covent Garden there is a landlord who is forcing rents to unsustainable levels in Covent Garden and killed the very essence of the neighbourhood. In 1977, Adam Smith spoke in the Wealth of Nations of 'supply meeting demand' and of the 'invisible hand at work in society' stating markets will find their level in all areas be it property, currency or stock markets.
I think that as businesses we need to take the opportunity to look at what our long-term visions are and be confident in our ability to not allow 'Project Fear' become a reality. No doubt over the coming months and years the storm will calm or someone's storm will look more severe than ours.
David Abramson, CEO Cedar Dean Group