Rathbones’ Smith: Initial reaction to Brexit announcement
It looks like much of the nitty-gritty on trade in services, financial services regulation and fishing will be worked out during the transition period. This fits into our idea that we will have a Brexit deal de minimis in March, with most of the details still to be worked out – a “never-ending story”. So even if it passes the Commons, that will likely mean another two years of stagnating business investment. It’s still all to play for: Mr Rees-Mogg and co are saying they will vote the thing down. But given that it looks like much of the detail will be worked out at a later stage, could some of them be persuaded to vote for it? Especially if the alternative is a second referendum or a general election and the possibility of no Brexit at all? The pounds is up 1.5c on the dollar, but the exchange rate’s still weaker than it was a month ago, so markets still very undecided.
Edward Smith CFA, Head of Asset Allocation Research
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