Notable commentators in the asset management international investment industry have reacted to the news that plans to Brexit early without a parliamentary vote have been overturned.
Yesterday, as reported, the UK High Court overturned UK prime minister Theresa May’s plans to invoke Article 50, with three judges stating that the UK government must consult parliament before it is able to proceed with formal negotiations over its withdrawal from the European Union.
The ruling, brought about by a group of individuals, who challenged the legal right of the UK government, to take the formal steps to invoke Article 50 of the Libson treaty, has already aggravated political uncertainty surrounding ‘Brexit’ and is having a affect on financial markets.
Richard Buxton, head of UK equities and chief executive at Old Mutual Global Investors, said: “As a team we have been studying the likely ramifications of this ruling for some time. It’s no surprise that sterling is strengthening against the dollar, causing weakness in dollar-related stocks and a rally in domestic cyclicals.
“The slight shift in stock market leadership is unlikely to be permanent however, given the UK government is expected to appeal against the decision, with the distinct possibility this will be elevated to the Supreme Court,” said Buxton.
He says that he feels that the situation was created “totally unnecessarily by Gina Miller and her cabal who, under the patently false shroud of pseudo-democratic credentials, have threatened a democratic tradition in the UK, that whilst far from perfect, traces a proud history over 800 years back to the Magna Carta”.
‘Break-up of the EU’
“Whilst the beurocrats of Brussels, Frankfurt& Strasbourg are no doubt celebrating tonight, the irony is that while they might have succeeded in imposing an EU style plutocracy over the UK’s legislative processes, this could result in a wave of reactions across the Euro zone, from Italy, France, The Netherlands all the way to Germany itself that could well see the break-up of the EU itself.
Gambles added that he believes that investors should abandon the single currency and Eurozone assets “while they still can, especially if the coming days see a relief rally on the news,” he said.
Martin Arnold, director at FX & Macro Strategist at ETF Securities, welcomed investor optimism following the news.
“Optimism from investors is stemming from the fact that the UK parliament will attempt to steer the UK further away from the ‘hard Brexit’ stance of the Conservative government, which will be less damaging for the UK economy,” he said. “Volatility is likely to remain a feature for currency markets, with an appeal by the government likely. The Pound jumped over 1% against the dollar but has since pared some gains.”
Mihir Kapadia, chief executive of Indian-based Sun Global Investments, said that delegates will have an interesting topic of conversation when they welcomes UK PM Theresa May for her scheduled visit to New Delhi on 7 November.
“The historic announcement that the UK government has lost the Brexit case in High Court means that parliament must vote on whether to trigger Article 50. Theresa May claims this is a subversion of justice whilst ‘In’ campaigners will be thrilled; one thing is for certain that current market volatility will be heightened.
“The government will appeal to the Supreme Court, however if they agree with the High Court judgement there could be a big impasse with no clear route for resolution,” he added.