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Brexit’s delayed but your financial decisions shouldn’t be

Brexit’s delayed but your financial decisions shouldn’t be

14 March 2019

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

MPs just voted to delay Brexit to at least 30 June.

There was a big majority, with 412 votes in favour of delaying and 202 against.

FTSE futures were largely unmoved on the announcement, and sterling fell from around $1.3280 to $1.3250 in the immediate aftermath, but stayed within its range for the day.

What happens now?

There are still a couple of ways things could play out from here.

Theresa May will need to go back to the EU to ask for an extension of Article 50. And she’ll need to get a deal through parliament by 20 March before putting forward the extension to 30 June. If her deal keeps getting rejected we could start to see further delays.

The EU could reject her plea for an extension though, and the default position would be to leave without a deal. But MPs have signalled they won’t let this happen – they still have the legal power to stop Brexit altogether. That said, early signs tell us the EU is ‘open to a long extension’ to give the UK time to ‘rethink’. So Brexit is still on the cards.

But lots of companies are doing well

It’s easy to lose track of the reality for companies amid all the Brexit headlines. But the most recent results cycle has shown that UK plc is still in pretty good health for the most part.

Unilever, for example, saw underlying sales tick along nicely with 3.1% growth in 2018. That’s pretty impressive for a company whose products are already used by 2.5bn people every day. With margins rising too, it posted a healthy 12.8% increase in underlying earnings per share.

Meanwhile, Standard Chartered continued to benefit from the rapid growth in its Asian markets. The bank saw income from lending rise 8%, while reforms that have seen it reduce its credit risk appetite in recent years meant bad loans fell sharply. With underlying profits up 28%, the board upped the dividend paid to shareholders by 36%.

Even companies with more exposure to the UK have been delivering strong numbers. Barratt Developments, the UK’s second largest housebuilder, finished 298 more homes in in the first half of this financial year than last. And margin improvements meant profits rose 19.1%.

There’ve been high profile slips as well of course, but generally British companies have been enjoying a good time of late. And with the UK stock market offering a prospective yield of 4.3%, investors are being rewarded for backing them.

Remember yields are variable and not a reliable indicator of what you might get in the future. Investments can fall as well as rise in value, so you could get back less than you invest.

The taxman isn’t going anywhere

The biggest problem for us as investors is another few months – at least – of not knowing where we stand. It’s all too tempting to put off financial decisions until we know what’s happening, but putting things off can be risky too. Focus on what we do know – the tax year ends on 5 April.

Losing your ISA and pension allowances can hurt your wealth in the long term, so it makes sense to us to make the most of them now. Tax rules can change and benefits depend on individual circumstances.

You don’t need to invest straight away, you can always put your money in and hold it in cash until you decide where to invest.

How to shelter your money from tax in minutes

See our latest investment ideas

This article isn’t personal advice. If you’re unsure if any investment is right for you, please seek advice. Once held in a pension your money isn’t usually accessible until age 55 (57 from 2028).

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.


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Investment notes
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
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