Richard Buxton, manager of the £2.1bn Old Mutual UK Alpha fund and head of UK equities, has said the UK will not end up with a 'no deal' or 'hard' Brexit, despite the prospect of some "scary moments" during the negotiations with the EU.
Earlier this year, the fund manager observed the UK economy was "not quite as bad as we’ve been led to believe".
With the negotiations between the UK government and the EU over the terms of Britain’s departure having been more fraught in recent months, FTAdviser asked Mr Buxton whether he was still upbeat about the outlook for the UK economy.
He admitted: "There’s certainly a lot to worry about, but markets climb a wall of worry.
"For the economy, I’m actually still pretty sanguine because we slowed down last year and the beginning of this year largely because inflation rose and that squeezed real incomes.
"And, actually, now inflation is falling away, real incomes are expanding a little bit, the labour market is still very strong, consumer confidence is just beginning to show signs of stabilising and, thus far, companies don’t seem to have put on hold investment and spending plans ahead of Brexit."
He predicted: "Now I still think, although we’ll have some scary moments, we won’t end up with a no deal, hard Brexit fallout.
"I suspect we will end up taking whatever form of 'soft' Brexit the EU will offer us. So I still think the UK is relatively well positioned."
Asked whether he thought there were serious implications for UK companies, even in a 'soft' Brexit scenario, Mr Buxton said sterling would be the "litmus test" for UK markets.
"If there is a move towards a harder Brexit or no deal, sterling will take the strain, and is likely to fall significantly further," he explained.
He added that would be "quite good news" for many big UK multinationals but that it would mean the UK would "have another wave of inflation" over the coming 12 to 18 months, making it tough for many consumer-facing businesses.
Turning to the potential for a trade war between the US and China, Mr Buxton observed: "It is right up there at the top of the worry list, I’m afraid."
In July, Mr Buxton announced Old Mutual Global Investors would be renamed Merian Global Investors from October 2018, following the company’s demerger from Old Mutual.
He has previously said the company would have a majority of women on its executive board and speaking to FTAdviser, he reiterated he was a "firm believer in gender diversity and the benefits of it".
"I’m delighted that we, at my business, have an awful lot of senior women in major roles – there is a majority of women on my ex-co [executive committee], which is unusual."
