Politics and portfolios: Our latest Brexit thinking
What our chairman and investment leaders told clients this week about the most recent market moves and MP machinations.
3 min read
15 Jan 2021
21 Dec 2020Positive news about coronavirus vaccines boosted markets in November as investors embraced the idea of a COVID recovery3 min
Our chairman Lord Waldegrave – a 40-year Whitehall veteran who was a minister for Margaret Thatcher and John Major – shared his insight into what’s happening in Westminster and what could happen next. Our investment experts Sven Balzer and Alan Higgins then covered market reaction and our portfolio positioning.
Here are the key points from their analysis.
Head of Investment Strategy
Head of Portfolio Construction
On the politics…
“I believe the odds are now shifting again towards her deal actually succeeding.”
Lord Waldegrave: “Mrs May is going to bring back her plan again next week. The strategy is to make it clearer and clearer and clearer to Brexiteers on the right wing of the Conservative Party that there is a real and growing risk of them losing Brexit all together – or having a very, very long, delayed Brexit if they don’t vote for her deal.
“I believe the odds are now shifting again – slowly, slowly – towards her deal actually succeeding. But it is still a very high-risk strategy indeed.
“A delay is only going to be available – remember it has to be agreed unanimously by the European Union, all 27 countries – if there is something on the table to give them a good reason.
“I think there are three reasons they would accept. One – we have a general election. Two – that we say we’re going to have another referendum. Or three – that we say we need a short delay because we’re actually going to do the deal and we need time to put the legislation through.
“The first two of those reasons are anathema to the ERG [the European Research Group – an alliance of pro-Brexit Conservative MPs] and the Brexiteers. So are we going, finally, to be driven to the position of them saying ‘we don’t like this deal, but everything else is so much worse that we might not get Brexit at all’?”
No surprises in Spring Statement
UK Chancellor Philip Hammond’s Spring Statement this week was a low-key affair, as expected in the current climate of Brexit-related uncertainty. The Chancellor himself had previously called it a “non-event”.
But the numbers announced during his speech from the Office for Budget Responsibility (OBR) reinforced the point that the UK economy continues to grow despite the drama surrounding the UK’s split from the EU. While growth has slowed in Britain – in line with what’s happening globally – the OBR still expects the UK economy to expand by 1.2% this year and 1.4% next year.
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When investing, past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.
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