Exponential Investor is not just about technology; it covers all kinds of critical, long-term trends. These seismic economic shifts are guaranteed to affect your portfolio. Learning exactly what such transformations mean for your investments is the central theme of our sister publication: Cycles, Trends and Forecasts.

A recurring theme for Exponential Investor is demographics. It’s an inescapable force, impacting all investors. Allow me to give you a little personal context…  I live in a small town, on the fringes of a large conurbation in the Home Counties. In the decade or so I’ve been there, it has become visibly more diverse – in common with much of the UK. For example, burkinis are now frequently seen at the local pool. These obvious cultural markers serve as a highly visible reminder that Britain is in a period of rapid change – along with much of the West.

 

Renaud Camus calls it the “The Great Replacement”

If your portfolio isn’t ready for this astonishing demographic shift, then get ready for a battering. I’m already prepared, and I invest in nothing that’s stereotypically “British”. You won’t find any “Brexit brands” in any of the firms I invest in – such as HP Sauce. Instead, a firm’s appeal to the new residents of the UK is very much at the top of my mind, when I’m placing my bets.

Why am I taking this seemingly radical step?

The historic populations of western Europe are withering away. Birth rates have fallen well below the replacement rate – as I’ve previously explored. For example, Germany has a catastrophically low fertility rate, of just 1.4 births per woman. Only mass migration has saved western Europeans from living in half-empty countries – a fate which has already befallen eastern European nations, such as Bulgaria and Poland.

Consequently, there’s been a huge change in the make-up of today’s young children. In Germany, well over a third of infants are now from a migrant background. In the UK, what our government clumsily terms “white British” babies are now only around three-fifths of the total number of births. After just a few generations, western Europe’s traditional populations will be a shrinking minority – replaced by ever-enlarging numbers of migrants, and their descendants.

We can see this happening on a huge scale, already. In London, around two-thirds of births are to foreign-born mothers. This, of course, does not include women who were born in the UK to migrant parents. If we were to include them, the total would be much higher. This shift is setting the “white British” population of the capital on a course to become a mere demographic sliver.

These statistics clearly show the reality of “The Great Replacement”. Britain’s urban areas may be leading the way, but the country as a whole is taking the same journey.

As a trailblazer, London is not alone. Luton, Leicester and Slough are already minority-majority, with Birmingham soon to transition. Oxford’s professor of demography, David Coleman, predicts that the country as a whole will be minority-majority by 2066 – well within my expected lifetime. Accordingly, this dramatic transition is an absolutely essential factor in my investment strategy.

What will a minority-majority UK be like?

You might expect that the UK would become a “melting pot” of different cultures, living side-by-side. However, trends in both the UK and the US show that increasing neighbourhood segregation is the norm – even as the country becomes more diverse. You can glimpse this segregated future today – in places such as Newham and Brent, where “white British” residents are already much less than a fifth of the population.

Your investment portfolio must be based on this new demographic reality

Customers of the businesses of tomorrow will not be “white British”, and they will live very different lives from the historic population of the UK. What many people now think of as “British culture” is rapidly shrinking – and you must not depend on it flourishing, as you invest.

As well as a relative slide in the fortunes of quintessentially British brands, one example of how demographic trends will manifest themselves is in matters of faith. To many Westerners, religion means little more than holidays, weddings and funerals – with a traditionally Christian flavour (with pagan roots, if you’re splitting hairs). The concept of an all-encompassing religion may seem, to many of us, like a throwback to a pre-enlightenment era of our history. But pervasive religion is a daily reality for many in the UK’s minority communities.

Of course, Christianity is not the typical driving force, here. As a religion, it is increasingly sliding into irrelevance – as pensioner-heavy Church congregations inevitably thin out. Congregations have roughly halved since the moon landings, and will halve again in another 40 or so years.

To find our future customers, we need to look to new religions and cultures

Tomorrow, we’ll be doing just that.

How have you prepared for “The Great Replacement”? Do let us know: andrew@southbankresearch.com.

Best,

Andrew Lockley
Exponential Investor