Early response to the Brexit vote

Professor Robin Bladen-Hovell, Professor of Economics

With financial markets unwinding their immediate response to the decision to leave the EU, the initial dust from the referendum is beginning to settle and the nature of the likely short-term effect of the referendum on the economy is starting to emerge. While short of the gloom and doom prospects painted by the Remain Camp prior to the vote, the picture that is starting to take shape appears grim for the next few years at the very least with considerable opportunity for it to become grimmer should some of the downside risk-factors fall unfavourably.

The immediate response to the referendum result was a sharp decline in the UK stock market with the FTSE100 falling just over 5½% by June 27th while the broader FTS250 fell by just over 13½% in the same period. These effects, however, have been transient with the headline FTSE100 which represents larger, more internationalised, companies recovering within a week of the referendum and the FTSE250 eventually recovering the losses by August 5th.

Sterling also fell in the days following the referendum: 8% against the dollar and 6% against the euro. However, unlike the stock market movement, this decline has not been reversed as UK citizens who have travelled abroad over the summer have discovered to their cost. A falling, or depreciating exchange rate means that we receive fewer dollars or euros in exchange for our pounds than was previously the case or, put another way, each dollar or euro costs more sterling to acquire. Other things being equal, these changes make goods and services exported by the UK cheaper in foreign currency terms while increasing the price of goods and services imported into the UK, a potential stimulus to net exports and the demand for goods produced by the UK.

However, the overall benefits of this decline are likely to be small and temporary in nature. UK producers who depend upon imports for raw materials or components will find the benefits of the depreciation offset, at least in part, to the extent that depends upon the international character of their supply chain. Ford UK, for example, recently announced that 60% of their components for cars produced in the UK are imported from aboard with the result that increasing cost pressures will offset a significant portion of the benefit that otherwise flows from a lower exchange rate. Moreover, over time, the benefits of the depreciation will be offset more generally as domestic prices across the economy adjust to increased import costs.

Unfortunately, alongside the movement of the exchange rate, evidence is beginning to accumulate as to the deteriorating state of consumer and business confidence that was predicted ahead of the referendum. The evidence takes three forms: the sharp decline in the July Consumer Confidence Barometer produced by GfK NOP (UK) and the Markit/CIPS UK Purchasing Managers Index published for the same month and the equally dreadful results from the August CBI Business Confidence Survey. In each case either the headline figure or a key component recorded the sharpest decline since 2009 – in the case of the Consumer Confidence Barometer the 11 point decline represented the sharpest drop for more than 26 years.

Such movements suggest the onset of a slowdown in the economy with anecdotal evidence pointing the finger in large part to increasing economic uncertainty following the referendum. In the face of increasing uncertainly, households and firms are likely to delay decisions regarding expenditure generally and investment in particular, thereby reducing the level of aggregate demand in the economy and lowering growth.

Although no official economic data about the actual state of the economy has been published to confirm the onset of a slowdown in economic activity, or otherwise, City and other economic forecasters have in the main all revised down their predictions for the economy this year and next. Examining matched forecasts of output growth, produced by the same forecasters in June and July show, on average, a reduction in the growth forecast of 0.3% for this year and 1.6% for growth in 2017. Predictions for unemployment and inflation deteriorate similarly over the same horizon and the key factor influencing this worsening outlook is the referendum result.

This weakening of confidence seems to have played a key role in the decision by the Bank of England to relax monetary policy at last week’s meeting of the Monetary Policy Committee which cut the headline Base Rate to the historically low level of 0.25%. The cut was accompanied by a package of measures, including an Asset Purchase Facility known as the Term Funding Scheme, that are designed to ensure that banks pass-on the benefit of lower rates to households and firms. Despite this, however, the Bank of England’s actions are likely to have very little effect on the economy in practice. Base Rates have sat at 0.5% for since March 2009 so last week’s change is very small beer. Equally the relationship between interest rate policy and the economy is complicated and much more effective at constraining demand when policy is tightened than it is in expanding the economy when policy is loosened, sometimes compared with trying to move a weight with a piece of string: it works well when the string is tightened but doesn’t necessarily do much when the string is loosened.

While the current capacity for monetary policy to influence the economy is probably limited, changes in budgetary policy take longer to implement and are unlikely to be occur before the autumn should the slowdown in the economy be confirmed. This, in part, reflects the sensible decision to wait upon firm evidence of a slowdown in the economy and allowing its prospective depth to be assessed as well as judging whether it is likely to be temporary or more protracted. The delay also reflects the need for Philip Hammond, the new Chancellor to think through the detail of a new fiscal framework given George Osborne’s decision following the referendum result to abandon the budgetary target of running a surplus by 2019/20. The new framework will not represent an abandonment of austerity since government existing debt will still need to be repaid no matter what, but will have to reflect the new reality representing the changed circumstances following the leave vote. Any slowdown in growth will lead to tax revenues falling, worsening the deficit position and making that 2019/20 target less achievable. A discretionary stimulus, whether in the form of reduced tax rates or spending increases, will compound this with the result that the period of austerity will effectively extend beyond 2020.

All of this, of course, is before Article 50 is triggered and official negotiations to leave the EU commence. Only then will we begin to see what the Prime Minister meant by “a vote to leave is a vote to leave” and the precise shape Brexit begins to emerge. Taken together, all of this suggests that developments over the next couple of months will be critical.


Dr. Haoyong Zhou presents research work in China

Lecturer in Finance, Dr. Haoyong Zhou has recently returned from a Economic and Social Research Council (ESRC) and National Science Foundation of China (NSFC) funded trip to China. He was invited to give a talk about some of this current research at an event organised by ESRC and NSFC.


The aim of the symposium was to facilitate UK and Chinese researchers in research collaboration and fund application. Many of the leading Chinese universities attended the event and each attendee gave a speech on the the topic of developing financial systems to support sustainable growth in China.Dr. Zhou gave a talk about his research on cross-border mergers and acquisitions of Chinese firms.



Performance management is ineffective, demotivating and based on inappropriate targets

Performance management is ineffective, demotivating and based on inappropriate targets according to the findings of a Keele University report based upon a survey conducted by the Public and Commercial Services (PCS) Union into the divisive system.The report by Dr Steve French of the university’s centre for employment policy and equalities looked at our survey which 27,000 members took part in and highlights members’ difficulties and issues with the PM systems under which they work.

A week of action, which started on Monday 25 June, called for the scrapping of performance management across the civil service with activities involving political action, lodging grievances and raising awareness. Performance management systems operating in government departments are discriminatory and unfair and give a pre-determined 10% of staff the bottom box marking. In the survey, more than 60% of members described their overall experience of performance management as ‘mainly negative’.

A key issue identified by members’ responses to the survey is that of forced distributions: almost four-fifths (79.7%) do not believe that ‘a fixed 10% of staff will receive a must improve rating’ and three-quarters (74.6%) do not agree that there should be a limit on the number of top (exceed) ratings. Indeed, two-thirds of respondents (66.2%) agree that PM would be fairer if the forced distribution of box markings were removed.

Negative opinion
Dr French said it was “hardly surprising that a clear majority of members have a negative opinion of PM, reinforced by the views of those members within the survey sample who are line managers.”

Over four-fifths of those surveyed do not agree that PM causes ‘healthy competition’ between members of teams (88%), almost two-thirds (65.7%) agree that it places too much pressure on line managers and over half (53.9%) believe that it is used to bully and harass staff.

The report highlights deep levels of resentment towards the system, with many members questioning its relevance to their work. There is also a perception from certain groups of members, notably those from black and minority ethnic backgrounds, disabled members, those in more junior grades and older workers, that they are subject to detrimental treatment and outcomes under the PM.

Dr French concluded that “in the light of a system in which members appear to have lost faith and whose relevance is questionable as well as one which is discriminatory it would appear that a fundamental reform or even the termination of PM would be appropriate.”

Read the report in full.

Theresa May wants to abandon human rights, and over 800 years of British history.

Dr. Laura Mitchell, Lecturer in Management

In yesterday’s news headlines, one major candidate for leadership of the Conservative Party has claimed that Britain should want to leave the European Convention on Human Rights. This argument has derived from a history of struggles over the rights of prisoners and foreign national extremists. Yet it overlooks the long history of contested relations between the government and the people in this country.

Some analysts have pointed out that the recent referendum more closely addressed an expression of a feeling of lack of control or powerlessness rather than the issue of Parliamentary sovereignty. In this, the events of the past few days reflect an extremely long history of British contention between rulers and ruled which has encompassed much more than the British Islands.

My previous post on the Magna Carta highlights how that 800 year old document marks the shift away from religious to secular law, and specifically challenges the Government (in this case the Crown) to recognise the basic needs of ordinary people, to be able to sustain themselves despite the demands of the Crown to provide funds and soldiers for ongoing and fruitless war with France. Enshrined in this document was the concept that the monarch was not above the rule of law, and subsequently, further movements such as the Chartist movement made the same claims about the governing authority of Parliament, claiming that not only was the monarch not above the law, but neither were those of the House of Lords or House of Commons.

Fast forward several hundred years and persistent war in Europe had spread across the declining Empires of France, Russia and Britain, against those of Germany, Austria-Hungary and the Ottoman Empire. This Great War was only shortly followed by another, as financial penalties enforced on the aggressors were wholeheartedly rejected by a population driven to the far right through austerity.

The parallels with today’s situation in England, Brussels and Greece, in particular, are frightening. The European Convention of Human Rights (ECHR) was an outcome of these Imperial conflicts and an attempt to assert the worth of the individual as something that cannot be overruled by the State. No matter the argument for the ‘greater’ need or purpose of the nation, no individual should be denied life, liberty, due process before the law, freedom of thought, assembly and association. It is this agreement which prohibits police brutality, imprisonment without trial, forced labour and many other terrible instances of state domination of individuals or groups.

In British Law, the ECHR is incorporated into domestic use through the Human Rights Act. Yet in debates over terrorism and illegal migration, there have been numerous attempts to deny these rights to specific individuals. Regardless of the worthiness of these individuals, would you trust current politicians to maintain these rights for you and yours while denying them to someone else? The matter of freedom of expression and association is crucial here, as we enter a time of political upheaval and passionate differences over what our future as a nation, in business and civic life, might look like.

This poem, which you may have encountered before, directly addresses these issues of individual rights and the power of the state. Scrutinise those who would strive for power carefully, for we may not like what they do with it.

Did Bank of England governor speech shore up confidence in Brexit UK?

Gabriella Legrenzi, Senior Lecturer in Economics, Keele University and Costas Milas
Professor of Finance, University of Liverpool have published an article on The Conversation in reaction to Bank of England Governor Mark Carney’s press conference last Friday.

“Bank of England Governor Mark Carney was admirably quick to read the unfolding economic dangers of a Brexit when the referendum result was declared. While stock markets and sterling plummeted amid developing financial stress, the governor’s statement immediately brought to mind the famous “whatever it takes [to save the euro]” intervention by European Central Bank chief Mario Draghi at the height of the eurozone crisis in July 2012…”

Read the full article here

NARTI Workshop: ‘Translation in Research: Empirical, Conceptual and Methodological Considerations


An event sponsored by NARTI (Northern Advanced Research Training Initiative) was hosted by Joanne Garrick of NARTI and Professor Susanne Tietze (Keele Management School) on the 26th of May 2016 at Keele Hall.

The theme of this event was ‘Translation in Research:  Empirical, Conceptual and Methodological Considerations’. The workshop provided plenty of opportunity to explore the challenges of conducting international research, which is frequently informed, designed and executed in several languages – while research accounts are invariably published ‘in English only’.

Delegates, mainly doctoral students, reported from their struggles to incorporate  non-English language data in translated form into their research accounts. The speakers, Professor Nigel Holden (What is being translated in international business and by whom?), Professor Dvora Yanow (On translation)  and Professor Susanne Tietze (Multilingual research – monolingual management publications: management knowledge in English only) provided inputs about theoretical, philosophical  and also practical aspects and approaches to translation, which could be drawn upon to inform the writing up stages of  (doctoral) research, where ‘foreign’ language data usually disappears as it becomes transformed into English data.

narti blog

Doctoral researchers struggled in particular with the ‘practicalities’ of translation relating to questions such as whether to use professional translators, how much detail to report about the translation process or whether to leave ‘other language data’ visible in their texts.  In total, translation was seen and explored as a crucial issue in the globalisation of business and management research where ideas, meanings and practices travel across the globe; yet where international management, policy and business research is still to develop a more sophisticated understanding of translating across linguistic, cultural, practice and methods boundaries.


Visit to Turku School of Economics

turku logo

Professor Kurt Allman (Director of Keele Management School) and Professor Mihaela Kelemen (KMS/CASIC) visited Turku University in Finland on a mission to forge closer links between KMS and Turku School of Economics and between CASIC and the Finnish Centre for Collaborative Research (CCR). Hosted by Dr. Aki Koponen, CCR Director, the visit included two round tables. The first discussed the challenges of HEIs in supporting regional business growth across traditional manufacturing industries as well as new start-ups in sectors. As the Turku region has managed to retain internationally competitive ship-building capabilities as well as being home to online gaming companies, participants drew parallels with the current situation in the Stoke-on Trent area.

The second round table focused on Culture, Arts and Higher Education and centered on Professor Kelemen’s presentation of the achievements and aspirations of the Community Animation and Social Innovation Centre (CASIC). Both events attracted a diverse audience of practitioners and academics who engaged in a lively exchange of ideas and practices across the two countries. Professor Kelemen also presented her Connected Communities research findings to PhD students from the Human Research Department, while Professor Allman visited the Boost Incubator, whilst only 7 months old, was already incubating
pre-start ups and born-global businesses.