May 2019 BREXIT: UNCERTAINTY IS THE WATCHWORD, BUT INVESTMENT OPPORTUNITIES STILL EXIST! The Brexit leave date has come and gone and the future of the UK relationship with the EU is plagued with uncertainty which looks set to continue – but with a new deadline of Oct 31 2019. MORE OF THE SAME – WHAT TO SAY TO BUSINESS LEADERS? The UK Prime Minister’s resignation only serves to confirm the now familiar message to business i.e. that they must continue to plan for uncertainty:
So what ‘upsides’ can there be to any of this? Well, there are a few unusual pockets of investment opportunity that remain and flourish! There are also some that could benefit from some forms of Brexit. Prime property – only a no deal Brexit, the default position if nothing can be agreed, will endanger the UK property market, particularly in London and the major cities. The Heathrow expansion, HS2 and the completion of Cross Rail all provide reasons for optimism for carefully selected property investment. Some property prices are presently settling as the machinations of the Brexit negotiations continue, but strong rental demand in certain prime areas is likely to remain high, so value for money could be had, especially if buying in foreign currency if sterling falls. Advertising and Creative Industries – UK remains a key world hub for some industries. The IPA (Institute of Practitioners in Advertising) Bellwether Report for q1 2019 stated the balance of advertisers reporting increased marketing budgets grew to +8.7% compared with +0.0% in Q4 2018. Significant growth was reported across all categories aside from market research, sales promotions and direct marketing. Reason here for optimism about investment opportunities in the sector, but also for the UK economy at large. UK Equities – A weaker pound means companies that are major exporters enjoy a relative advantage because its products become cheaper overseas – many of the FSTE 100 and 250 fit this bill. There’s also a profit boost when this money is repatriated. This is why the stocks that have tended to be strongest this past year have been big exporters, leaving many domestic U.K. stocks looking quite undervalued. The UK Tech Sector – European investment in the British tech industry surged last year as the sector shrugged off Brexit uncertainty. Cash injected from Europe jumped to a record high of £1.89 billion in 2018, up from £1.66 billion in 2017 according to new data from law firm Penningtons Manches. The EU remains confident in the long-term prospects of the sector in the UK, the firm said, as the value of deals involving at least one EU investor rose to £1.53 billion, from £1.26 billion in 2017. driving the city’s digital infrastructure and preparedness for a connected future.
THE BACKGROUND FACTS…AN UPDATE! Click here to have a better understanding on the evolution of Brexit arrangements.
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