Predicting the future
Despite the recent election, there are potential challenges ahead that could make trying to predict what will unfold or even how markets will react, extremely difficult. Whilst ‘no deal’ risks have diminished in the near term, there are still a number of uncertainties.
The focus will now fall on just how Mr Johnson goes about pushing his Brexit deal through considering that, once we leave the EU on 31 January, he’s still committed to leaving the single market and customs union by the end of 2020. This is a tearing hurry and likely to look a lot like a ‘hard Brexit’. However, having secured the biggest Tory majority since 1987, the hope is now that the Tories will be able to negotiate a better deal in Europe with Brussels welcoming the result as removing any further impediments to arriving at an accord.
In the near term, the reduction in political uncertainty should help boost growth but we need to watch developments over the next few months closely. A lot still needs to happen to “get Brexit done”.
This is not the end, merely the end of the beginning as we move to the next phase; the economic impact of Brexit remains far from clear. As a result, a diversified approach to the UK market seems sensible. Exposure to international FTSE 100 companies alongside some attractively priced small and mid-cap companies with a more domestic focus, will allow a portfolio to adapt to whatever comes next in the UK.
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