City Watch: Charles Sylvester reflects on Margaret Thatcher’s economic reforms
THE absence of alternatives continues to drag more and more investors into the equity market, despite the growing gap between the prevailing benchmark indices and operating reality, as measured by the macroeconomic backdrop.
At some stage Sir Isaac Newton will probably be proved right but in the meantime, with dividend yields on blue-chip companies showing a considerable improvement on cash deposit accounts, that is where the money will tend to go.
The main headlines this week have been captured by the death of former Prime Minister Margaret Thatcher. As we have seen, views on the “Iron Lady” continue to remain as polarised today as they were in her pomp, but in the City she will be fondly remembered.
Prior to her reforms, initiated in the mid-1980s, the stock-exchange was pretty much a closed shop; afterwards it became a dynamic market place that would sell privatisations, raise capital for all-conquering British businesses and create one of the top finance centres in the world.
In future, people will find it hard to believe just how nationalised Britain’s economy was before the Thatcher revolution.
As she said in her 1982 conference speech: “How absurd it will seem in a few years time that the State ran Pickford’s removals and Gleneagles hotel.”
On the other hand many people have only seen Mrs Thatcher as a deeply unreasonable woman. But if you want to be transformative, being reasonable doesn’t get you very far.
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During her time in office, real wages rose for every UK income group. Just think how delighted we would all be if someone that unreasonable turned up today and made that happen again.
: : Charles Sylvester is a stockbroker at the Ipswich office of Charles Stanley & Company.