BOE Chief Economist's "deep misunderstanding" of economic impact of Brexit vote
Companies: J D Wetherspoon plc
Weatherspoons released its Q2 Trading Update this morning, most of which was a broadside from the outspoken Chairman, Tim Martin, against the establishment, economist predictions and the EU. As always it's an entertaining read which contains some good points, which I have quoted below.
Looking at the company's performance, sales were up 0.7% over the quarter with like-for-likes up 3.2%. Management expects operating margins to improve to 8% for H1, up 1.7% year-on-year.
The group have been active in managing its properties, with 21 pubs sold so far this financial year, two new pubs opened and 10 to 15 expected to open over the course of the financial year to June.
The financial position is stretching slightly, with net debt at year-end expected to rise by £50m, "partly as a result of the purchase of an increased number of freehold reversions".
Tim Martin, Chairman, strikes a cautious tone for H2 trading but confirms a better H1 should result in the full year being slightly ahead of previous expectations:
"...like-for-like sales will be lower in the next six months, the Company remains cautious about the second half of the year. Nevertheless, as a result of modestly better-than-expected year-to-date sales, we currently anticipate a slightly improved trading outcome for the current financial year, compared with our expectations at the last update"
Going back to the establishment-bashing, Tim Martin commented:
"In recent weeks, I have been asked frequently by the media to comment on the difference between the apocalyptic predictions by most economists for the economy and the actual outcome, following the referendum.
"The Bank of England's chief economist, Andy Haldane, called these predictions a 'Michael Fish' moment for economists, but his comments demonstrate a deep misunderstanding of the situation.
"Michael Fish's predictions were a misinterpretation of data on one evening, under great time pressure. In contrast, the majority of economists, economic institutions, politicians and intellectuals has consistently misunderstood the implications of the euro, its predecessor the exchange rate mechanism and the implications of leaving the EU, over a period of about 30 years.
"The underlying reason for their catastrophically poor judgement is a semi-religious belief in a new type of political and economic system, represented by the EU, which lacks both proper democratic institutions and the basic ingredient for a successful currency - a government.
"It also lacks any genuine commitment to free trade, other than to countries which are in, or on the borders of, the EU. Unless these lessons are learned and acknowledged by economists, their historic mistakes will be repeated.
"As regards the other frequently asked question about the government's stance on dealing with the EU, the golden rule in any negotiations, ignored by David Cameron, is the willingness to walk away.
"Most people now understand that the mutual imposition of World Trade Organisation (WTO) tariffs would create a windfall for the UK, so a sensible basic mantra for the UK is 'free trade or World Trade Organisation rules - the EU can choose'."
Shares are up 2.44% in early trading as the market welcomed the strong H1 delivery.
