The key events for the UK’s Brexit Process July 2019
Brooks Macdonald View The market’s UK outlook remains fixated on Brexit above all else. UK corporate earnings, economic fundamentals and business sentiment all play second fiddle to the outcome of the UK’s secession from the EU. Boris Johnson’s government will not have an unfettered ability to determine the fate of the UK/EU relationship. The parliamentary arithmetic means that breaking away from the current impasse looks unlikely given how entrenched Brexit views even within the Conservative party have become. At the same time the upcoming changes to leadership within the major EU institutions on 1st November does not set a positive backdrop for large changes to the current withdrawal agreement.
95 Days Until the Brexit Deadline but just 22 Parliamentary Days
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Our base case remains that a soft Brexit is more likely than a hard or no deal Brexit but as we approach the 31st October the risks of no deal have risen significantly. Whilst it remains to be seen whether Johnson’s rhetoric tempers once he has settled into office, his first speeches as PM augur an administration more accepting of the risks of a no deal.
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Regardless of the result of Brexit we believe the Johnson government will want to tilt towards expansionary fiscal policy but until markets know the path of Brexit we expect sterling and UK assets to be range bound with risks to the downside. As a result we retain our underweight to UK equities; UK risk assets trade at a discount to global peers however we feel the binary nature of the current political impasse could lead to significant volatility in the near term.
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30 Commons Not Due to Sit (Friday & Weekend) Commons Not Due to Sit (Estimated Recess Dates) Commons Due to Sit
No deal and political risk reflected in Sterling weakness
Key dates in the Brexit process
81 25 July - 3 September - Summer Recess
80
Whilst Parliament is formally closed the negotiations between the EU and the new UK team will begin in earnest.
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This is the window opponents have to launch and debate a confidence vote against the government
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3 - 12 September - Commons in Session
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United Kingdom Sterling Broad Index (Index at 100 Jan 2005) Source: Refinitiv Datastream as at 26th July 2019
Important information All data provided by Brooks Macdonald and as of 26 July 2019, unless otherwise stated. Past performance is not a reliable indicator of future results. Investors should be aware that the price of investments and the income from them can go down as well as up and that neither is guaranteed. Investors may not get back the amount invested. Changes in rates of exchange may have an adverse effect on the value, price or income of an investment. Investors should be aware of the additional risks associated with funds investing in emerging or developing markets. Structured products are complex investments which may not be suitable for all investors. The information in this document does not constitute advice or a recommendation and you should not make any investment decisions on the basis of it. This document is for the information of the recipient only and should not be reproduced, copied or made available to others. Brooks Macdonald is a trading name of Brooks Macdonald Group plc used by various companies in the Brooks Macdonald group of companies. Brooks Macdonald Group plc is registered in England No 4402058. Registered office: 72 Welbeck Street London W1G 0AY. Brooks Macdonald Asset Management Limited is authorised and regulated by the Financial Conduct Authority. Registered in England No 3417519. Registered office: 72 Welbeck Street London W1G 0AY. More information about the Brooks Macdonald Group can be found at www.brooksmacdonald.com.
29 Sept - 2 Oct - Conservative Conference Major policy announcements and further outlining of Boris Johnson’s political philosophy
17 - 18 October - EU Council Meeting Last planned date for either ratification of an amended deal or granting of a further extension in negotiations
31 October - Expiry of Article 50 extensions Scheduled exit date of the UK from the EU