Brexit: Deal or no deal – should we continue to invest?
With all the world around us focused on Brexit, Boris and ‘Deal or no deal?’ you could be forgiven for being concerned about the impact this might make on your investment.
For many looking to invest, whether it’s for the first time or the fiftieth time, the negative press, changing political landscape and deadlines can be a bit daunting. It’s almost like being on a really long episode of ‘Deal or No Deal’ – except for the banker isn’t available at the other end of the phone, and Noel Edmunds is no longer there to give us any clues as to what to do next!
Here at Carrick Financial Management, we’ve had a number of our clients express concerns about whether to invest or not before that all-important (and ever-changing) Brexit deadline. Most people seem concerned by the potential effect on the economy and the value of the pound that Brexit may have.
With no deal currently evident and all the negative media stories about what we can expect when Britain leaves the EU on the 31st October 2019, you can be forgiven for worrying that we might be facing a Halloween horror show!
So what does this all mean for our economy?
Certainly, the value of sterling decreased after the results of the EU referendum were announced in June 2016, and has remained there ever since, but, on the other hand, if we were to look at the UK stock market, this has grown in strength. Particularly the FTSE 100.
Why is this the case? According to financial experts, this is because the UK stock market, particularly the FTSE 100, has a much higher share of large corporations who have vast global operations too, so aren’t solely invested in the UK.
Despite the increasing uncertainty around Brexit, this has not stopped investment from other countries flooding into the UK.
Here are just a few of the recent positive news stories regarding international investment in the UK;
- European investors have doubled their investment in our economy in the last three years, with an increase of a total of $31.1billion, from $21.2billion invested in UK businesses, properties and shares in the past year. (Telegraph, 2019)
- According to the EDHEC Infrastructure Institute Survey (2019), the UK ranked third in a list of countries with the most growth potential (in terms of infrastructure) over the next 5 years. (Actuarial Post, 2019)
- Investment in the UK from India has increased from 800 companies (2018) to 842 (2019), with figures predicted to continue to increase in 2020. (Economic Times, 2019)
- And Brexit certainly didn’t put US based Coca Cola Enterprises off from announcing they were buying the UK’s Costa Coffee, completing the deal just recently. (Guardian, 2018)
We asked our Founder and Senior Wealth Advisor, Michael Carrick, what his thoughts were around Brexit and whether he thought now was the time to proceed with caution;
‘While all the media around us is reporting and predicting terrible events and scaremongering, you have to remember that what is really causing feelings of reluctance amongst investors is this fear of ‘uncertainty.’ No one knows what will happen in the future, particular on and after 31st October. However, the same can be said of all investment decisions that we take, there’s always an element of risk to be involved.
‘Brexit is going to happen no matter what. Whether a deal takes place, or doesn’t, as Theresa May said, ‘Brexit is Brexit.’ The world around us, particularly the business world, is going to carry on regardless. Sure, there’s likely to be some fallout in the lead up to or the aftermath of Brexit, and that’s certainly true immediately after any important event where there’s risk and uncertainty involved. However, investing should always be more of a long-term strategy.
‘I’ve heard of some people managing their risk by investing elsewhere, in other countries and international investment funds, rather than UK based ones. That’s one strategy, though we need to remember that it’s a connected, global business world out there and the majority of UK portfolio funds do also include some companies with global investment too – so that’s something that’s worth considering before you decide where to invest. Maybe ask your independent financial advisor or financial expert how and where the risk is spread.
‘My personal view has always been to take heed of what the larger corporations are doing. I’ve noticed that what’s being shouted about far less in the media are the UK success stories. The fact that large, global enterprises like Coca-Cola, are continuing to invest in the UK and investors from other countries including Europe and India have increased their investment, showing confidence in our economy’s long-term performance, is something I’m far more interested in.’
Can’t make your mind up? Why not consult one of our investment experts?
Carrick Financial Management are a team of independent financial advisors. We’re here to help you to make the right choice when it comes to your finances and choosing the right investment fund. We won’t bore you like Boris, bamboozle you with Brexit speak and we won’t presume any prior knowledge either.
If you are looking for straightforward, no-nonsense advice, from real investment specialists that you can trust, give us a call on 0191 217 0007 or email