The Conservative Party’s comprehensive win in the UK election looks to have finally drawn some certainty under the question of Brexit, with the promise to “Get Brexit Done” by 31st January and a strong majority in parliament seemingly able to deliver this. In the immediate short-term markets have reacted positively to this with Sterling rallying and the UK stock market (particularly the more domestically focused FTSE Mid 250) surging on Friday morning.
The uncertainty of the last 3 years has held back investment in the UK economy and the anticipation is that there is a platform for this now to push forward. However, there are important and potentially controversial details in the Brexit deal still to be tackled, of course including bilateral trade deals with other countries and indeed the EU itself. Notwithstanding this, markets should be happier the path ahead appears clearer and also pleased that the risk of the more radical economic plans (including nationalisation and reregulation of some industries) of the Labour Party has been pushed into the long grass for now.
Questions will also be raised as to how the Conservatives will fulfil their spending plans whilst also honouring their pledges to rule out significant tax rises. This is likely to give rise to further increases in borrowing which may have a bearing on interest rates and returns from fixed interest assets.
As ever, we’ll be digesting the political news and the potential economic implications and adjusting portfolios in due course as we see appropriate.
We’ll be publishing our year-end commentary and outlook over the next few weeks which will provide much more detail around our thinking. In the meantime please contact your Wealth Manager should you wish to discuss anything further.