Don’t blame Brexit for UK economic wobbles, says ‘Mr Copper’
Michael Farmer, metals trader and prominent Leaver, points finger at China
The UK’s looming exit from the EU is being unfairly blamed for an economic slowdown, according to Michael Farmer, one of the world’s most influential commodity hedge fund traders.
Lord Farmer, a former Treasurer of the Conservative Party and prominent Brexiter who is known as “Mr Copper” for his sway over commodity markets, believes the decision to leave the EU has so far had little effect on the UK economy. He argues instead that global factors, such as the slowdown in China and a lack of other growth drivers, have had a stronger influence.
“The world’s economy is wobbling at the moment. Certainly in our role as a trader and seeing flows, and touching on demand for base metals [we see that],” he said in an interview with the Financial Times.
“There are enough signs of the world’s economy slowing down, stagnating a bit, possibly tipping over,” he said, adding that if there was a significant UK slowdown “I’m sure all the politicians here will blame Brexit”.
Lord Farmer is best known for founding the Red Kite metals hedge fund in 2005, which for years was one of the largest traders in physical copper. His comments on the UK economy stand in contrast to those of most economists. A survey by the FT last June of how much Brexit had dragged down the UK showed estimates ranging from around 1 per cent to 2 per cent of GDP.
Lord Farmer, who donated £300,000 to the Vote Leave campaign in 2016, said leaving the EU without a deal and instead using World Trade Organization terms could lead to “short-term confusion” and “teething problems” for the UK. However, it could potentially end up boosting the global economy, he added.
“I would argue, and I know that this may be a bit radical, that Britain leaving the EU would actually break up what is at the moment a rather comfortable trading relationship,” he said. “At the moment the world needs competition to be encouraged . . . We’re becoming sedentary in our economic blocs, if you like. I think Britain could be an agent for that.”
His comments come ahead of Tuesday evening’s crucial parliamentary vote on the deal negotiated by Prime Minister Theresa May with the EU, which is widely expected to be rejected by MPs.
What would happen next is not clear, with the UK scheduled to exit the EU in March but with a majority of MPs opposed to an exit without a deal.
Lord Farmer, who made large profits during the bull run in commodities more than a decade ago, is the latest Brexit-supporting financier to have spoken out ahead of the vote.
Last week hedge fund manager Crispin Odey told the FT that markets had decided Brexit would not happen and that, with a majority of MPs supporting remaining in the EU, “it’s easy to see . . . that you’re going to get a Remain result”. Meanwhile, Peter Hargreaves, billionaire founder of fund supermarket Hargreaves Lansdown, told Reuters he was “totally in despair” and believed Brexit would not happen.
Lord Farmer said the two years since the Brexit referendum had been “altogether quite disappointing” and that he did not know what would happen next.
“I am right this minute in time feeling despondent, but I pray,” he said.
Holding a second referendum would do “huge damage to trust in government, [and] trust in politicians”, he added. “There would forever be that recognition that democracy ain’t what it seems to be.”