Crazy Investment Markets on Brexit

Totally Crazy Investment Markets on Brexit.

The FTSE 100 index in addition to other world stock-market indices are surprisingly quite high following the Brexit vote.

It is difficult for us as advisers, you the consumer or indeed financial commentators and journalists to accurately predict the likely fallout of Brexit until negotiations begin.

There are literally hundreds of different views from many leading groups:

Leading tax and audit firm PwC suggests that any recession will not be as bad as anticipated and property prices will fall but not as much as anticipated, others suggest that property prices could fall by as much as 30%. Others suggest there will be a recession that could be as bad if not worse than the credit crunch crisis. One minute stock markets are rising the next minute gold prices are rising. In other calls the Bank of England has this month decided not to increase interest rates, some are suggesting this is wise others are saying it is a disaster and the Bank of England is ignoring the problem. There are even suggestions that Britain may not leave the EU.

Some suggest Britain will boom by leaving the EU and as you know, others predict recession.  With headlines like: “Britain’s economy shrinking at fastest rate since 2009” and “Brexit plunges UK economy to shock seven year low”, we are simply staggered by speculative investors driving markets up.

Comment

Our view is plain and simple, until the Prime Minister triggers article 50 notifying the EU that Britain plans to leave the European Union, it is business as usual. There will be a recession, but how deep that is will ultimately depend upon what trading agreement is agreed with the EU. Make no mistake, whilst publicly the Germans and French suggest that no negotiations will take place until article 50 is triggered, Angela Merkel and François Hollande will already have been sounded out by Theresa May. It is time to stop rumour and get on with the job in hand for the benefit of trade, economic and market stability to enable both the peoples of the EU and the UK to move on.

In the meantime, in trying to help you as clients with your pensions and investments, as you know we are "sitting tight" as we believe the current high for markets is artificial and the pain is yet to come.