Taking stock with stormy times ahead
Our roving accountant takes a cool look at the last week's political events and worries about how these might impact the profession.
Accountants tend to love certainty. That is unfortunate given all that is going on around the world at the moment.
Even in the last week, there has been a massive amount of flux. So I thought that this was a good time to step back, review some political and social developments and try and work out what on earth all of this might mean for our valued profession.
On this side of the Atlantic, there are still two main imperatives.
The first is to find a way of dealing with the pandemic and its consequences for the health of our citizens and the economy.
The second, which can tend to disappear from view at a time when we discover that the government would prefer us to stay at home for the next month, is the impending irrevocable break with the European Union.
In both cases, Prime Minister Johnson and his government have repeatedly shown that they have a common sense of direction. The problem is that that direction is a perpetual U-turn. It does seem quite remarkable that every time they decide to take an action, it gets reversed within a few weeks and, in some cases, days.
In what we might regard as our area, having looked like a shooting star in the spring, we are quickly discovering that Rishi Sunak is almost as much at sea as his colleagues.
Rather than accepting the inevitable and realising that when an England footballer says you have to provide food for disadvantaged children during school holidays, he did his best to resist.
Even more strikingly, having spent month after month repeating the mantra that the furlough was over and would not return, lo and behold, the furlough is back and not just for a month or two but right up until the end of March.
That brings us to the second lockdown. We were assured this would never happen and has caused dissension up and down the country, primarily amongst different factions within the government’s most avid supporters.
There seems every chance that however Johnson tries to dress it up, the country will be closed down to varying degrees for months to come.
Leaving the EU without a deal
The European situation is also getting out of hand. As this is written, Britain is still heading out of the EU with no trading deal. It will be interesting to see whether events in the United States have an impact, since there were rumours that Boris Johnson was relying on a friendly helping hand from Donald Trump after the latter’s re-election for another four years.
That has not come to pass, leaving the United Kingdom in a parlous position where we could be trying to deal with the world with no trading arrangements in place, beyond what looks like a pretty unfavourable deal with Japan. I’m well aware that many AccountingWEB readers have been of the view that “it’ll all be fine” when we leave Europe. Now that we're looking down the barrel of a shotgun, I wonder whether they still have that opinion?
Across the pond
In many ways, the most absurd news this week was not that Donald Trump still thinks he will be US president for the next four years even though it is generally acknowledged that Joe Biden has comfortably won the US election, albeit subject to a series of what sound like desperate legal challenges.
What I cannot believe is that a greater number of people than live in the British Isles have just voted for a man who spouted obscene lies on a constant basis.
To emphasise the point, 70 million people didn’t vote for him as a jokey dancer or cook on a TV programme but to be the person whose finger will be poised over a nuclear button that could destroy the world.
Impact for the profession
So how is this going to impact on our own practices? I wish that I knew. Clearly, unpredictable flux is generally bad news but prospective increases in taxes should generate some fees, while those of us that have thriving business reconstruction practices could also do well, provided we select our clients carefully.
There could also be opportunities around transactions, even if a lot of these are little more than fire sales. Finally, those of us who are lucky enough to have major consultancy practices can continue to bleed the government dry.
Beyond that, we will have to rely on the kind of smaller consultancy projects that are likely to arise because clients have no idea what to do in a world where certainty has become the exception rather than the rule.