In a referendum on the 23 June 2016, a narrow majority of the United Kingdom voted to leave the European Union (51.9% to 48.1%). The immediate impact of the decision rocked global markets and saw the value of the British pound plummet causing huge economic uncertainty. Since this date, talks between Britain and the EU have advanced slowly, with details of the new relationship still to be formally worked out.
Some of the most complex issues being negotiated by the current British Prime Minister, Theresa May, and the EU centre around the single market, British expats, and immigration. These are just a few of many issues around business, security and human rights which are being discussed as part of Article 50 (a plan which outlines the conditions of leaving the European Union).
The British economy has defied predictions of an immediate economic crisis, and the pound has made a cautious recovery against the US dollar, though it remains 15% down against the euro. Neither 2016 or 2017 saw economic stagnation of negative growth. However, there are still concerns that leaving the EU will have a destabilising effect.
As one of the UK’s leading investment managers, LGIM offers knowledge and experience that can bring real benefit to investors looking to understand the impact of Brexit on both British and global economics, policy and politics.
Our Asset Allocation team includes dedicated and accomplished European and Global economists, whose focus is to assess the macroeconomic environment across the developed world. This includes researching government policy, emerging political trends, as well as the outlook for economic growth and inflation. Our economists then work with our team of strategists and portfolio managers to translate their views into what this means at a portfolio level.
Opinion polls suggest a 'total wipeout' for the Conservative and Labour parties if a general election was held tomorrow; the 1993 Canadian Federal election offers some clues about what that would mean for 'outsider' political parties – and sterling.
It's now three years since the UK's vote to leave the European Union. Against the backdrop of ongoing political uncertainty, I talked to Bloomberg about the prospects for sterling. Brexit blues have once again taken hold, with the pound down 5% since the start of May, so is it now time to buy with all the bad news reflected in the price?
With so much still up in the air regarding Brexit, making predictions is difficult – particularly about the future. But we can prepare for a range of different outcomes and market environments, pruning our ‘probability tree’ as events evolve. Here’s our latest scenario analysis.