Who will seize the crown in Tory Party’s Game of Thrones?

A hugely popular television series whereby the main protagonists fight for control over the Seven Kingdoms. Alliances and betrayals are a common theme throughout – I think you can see where we are going with this. Look closely and there are similarities to be found between the series and the ongoing Conservative Party leadership.

Boris Johnson is the hot favourite to take over the reins from Theresa May. However, being the favourite to sit on the Iron Throne doesn’t mean he’ll be the one with the keys to 10 Downing Street – especially with plenty of other Tory hopefuls vying for the hot seat including Michael Gove, Dominic Raab, and Andrea Leadsom.

It’s too early to say who will succeed, but the Tory party need someone who can deliver Brexit. Recent European elections illustrated the country is still deeply divided over Brexit, but the fact that the Brexit Party, a party that had only been in existence six weeks before, managed to storm to victory should be a wake-up call not just for the Tories, but also Labour.

The promise of a second vote on Brexit also saw a resurgence for the Liberal Democrats.

The collapse of the vote for the Tories should be good news for Labour, but the truth is the Labour party is as equally divided as the Conservatives. The damage is less severe for Labour as they are not in power, but there is a gulf in opinion between those in the northern Labour heartlands and those living in London.

The Labour leadership knows this, which is why their strategy has been to criticise the Tory Party and change tack when it comes to their own Brexit strategy. The electorate demand clarity on Brexit, and if the two major parties cannot agree and compromise, they could both be sealing their own fates.

A lesson MPs can learn from Game of Thrones is sometimes you have to unite with your enemy to defeat an even greater threat. In the television series it was the Night King and his army of White Walkers.

We’re not saying Farage and his Brexit Party are the equivalent, but if Labour and the Tories cannot put their differences aside, at least for a short time, it could ultimately be the end of both parties. Both could be destroyed by a force neither side wants.

The clock is ticking on Britain’s departure from the EU. What does this mean for investors? Continued uncertainty is obviously not a good thing, but we remain favourable on the UK market.

Whether the UK stays in the EU or leaves is inconsequential; whatever we decide to do as a nation will provide certainty to markets. So, it stands to reason that investors in the UK will benefit as and when a solution to the Brexit debacle is found.

While we remain broadly positive on the UK, there are still dangers that investors need to be aware of.

One such example is Thomas Cook whose difficulties have been well documented over the last few weeks. Senior management at Thomas Cook claim it is Brexit uncertainty leading to their current difficulties.

While it has no doubt had a marginal impact, it’s likely that their struggles are more aligned with the £1.5bn debt pile they have on their books.

To provide some perspective, given the recent plunges in its share price its market value is just £265m.

So, the entire value of the company is just 18 per cent of their current debt pile. To ensure their long-term survival they are hoping to sell their airline, the one profitable part of their business.

Of course, selling will allow them to write-down part of their debt, but unless you can fundamentally change the business model and make the other areas of the business profitable, then you are only delaying the inevitable.

Since 2008, interest rates have been at all-time lows and, coupled with quantitative easing (which essentially pumps money from the central banks into the banking system), it has allowed businesses to borrow more money at a lower rate of interest.

Of course, senior management always believe they can deliver exponential growth when borrowing money, but when the winds inevitably change direction, they are always caught out.

When assessing companies, it has never been more important to pay attention to the fundamentals.