Industry cheers end of uncertainty but remains cautious

Pedro Gonçalves
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Industry cheers end of uncertainty but remains cautious

It was a long night for the ballot counters, as they went through millions of votes gathered at yesterday's election. The vote was the first to take place in December in the UK for nearly a century and for many this was the Brexit election.

The immediate implications of Boris Johnson's historic win for the industry remain unclear, but the sweeping away of uncertainty around Brexit seems to bring considerable comfort to many who feared months, perhaps years, of deadlock continuing with the possibility of a hung parliament.Here is what the industry is saying about it:

deVere
Nigel Green, founder and chief executive of deVere Group, said: "With a clear majority in the House of Commons, the grinding parliamentary Brexit deadlock that has had a stranglehold over the UK will finally come to an end.

"There is now a clear mandate for Britain to leave the EU with Mr Johnson's deal on January 31.

"The lifting of some of the crippling uncertainty has been welcomed by the markets, the pound and business."

He continues: "However, now that Mr Johnson has this ‘powerful mandate', he must use the momentum and immediately begin to recover the more than three and a half lost years of business investment and confidence that the Brexit saga created.

"The prime minister and his new government need to do two things as a matter of urgency.

"First, they must set out firm and unequivocal assurances around a no-deal Brexit for the end of 2020. After the passing of the Withdrawal Agreement, they have a tight, 11-month deadline to secure a deal. As such, the UK could still leave the EU without a deal if trade negotiations are not concluded in a timely and successful manner.

"Another cliff-edge of no-deal Brexit would serve as another hammer blow for investment and economic growth.

"Second, Mr Johnson's administration must actively seek to implement pro-business policies sooner rather than later to stoke enterprise and investment."

Green goes on to add: "Brexit has cost Britain many tens of billions of pounds. Brexit has inflicted reputational damage on the UK on a monumental scale, which has created unprecedented uncertainty and impacted economic and social progress.

"Now that haemorrhaging of opportunity and money must end."

The deVere CEO concludes: "The parliamentary paralysis might have ended but the Brexit process hasn't.  Now the hard work begins.

"For Boris Johnson to maintain the election bounce, he must act quickly and decisively to keep uncertainty at bay. There is much at stake."

eToro
Adam Vettese, an analyst at multi-asset investment platform eToro, commented:

"This is the result that the markets had been crying out for as it alleviates some of the uncertainty that has been lingering for the past three and a half years.

"Boris Johnson had promised to take the UK out of the European Union by the end of next month and, with such a large majority, he will really push the issue on this.

"We have seen sterling and UK stocks rally as a result, particularly in the domestically-focused FTSE 250 which is up 4.3% this morning.

"However, while elections are important, they actually mean very little long-term. What matters more to UK shares and Sterling is domestic monetary and government policy, and what type of trade deal Johnson & co can strike in the second phase of Brexit talks."

7IM
Ahmer Tirmzi, Investment Strategist at Seven Investment Management (7IM): "We have a Conservative government with some business-friendly policies and one big anti-business policy - Brexit. Most likely, the UK will enter into a transition period once Parliament passes the withdrawal agreement next week. This will last until the end of 2020. If the UK can't agree on a trade deal by the end of next year, it risks crashing out of the transition arrangements with a No Deal unless it requests an extension."

"Is the ‘oven-ready' Brexit deal the one that Boris Johnson will decide to go with? With such a large majority, it may be possible for him to sideline the European Research Group (ERG), which is pushing for a hard Brexit, and go for something softer, more manageable and positive for the economy. This might explain why the pound jumped on the election news."

"This election feels meaningful. That's how politicians win votes - by insisting that this is the election that really matters. In truth, Brexit-related economic uncertainty is set to continue, just in a different guise." Kames Capital
Colin Dryburgh, Kames Diversified Growth Fund on the general election results: 

"The headlines will record that, in returning Boris Johnson with a strong majority, the UK has voted emphatically to end the Brexit impasse.  More importantly, from a financial market perspective, the electorate have rejected the opportunity to lurch leftward into Jeremy Corbyn's vision of a socialist utopia that promised radical reform of the way in which the UK economy worked.  On both readings, markets are likely to heave a sigh of relief.

"Whatever the result, this election promised a leap into the unknown.  While it is now inevitable that the UK will leave the EU at the earliest opportunity and that a potential economic seizure of a ‘no-deal' departure will be avoided, this is only, as a previous occupant of No 10 said, the end of the beginning.  Time to celebrate perhaps  but there is much still to be done to wind back the stasis of the past three years."

BMO Global Asset Management
Steven Bell, chief economist at BMO Global Asset Management, said: "This is a positive end to the year for the UK and we could see a short-term rally. However, there remains longer-term fundamental weakness in the UK economy with interest rates on hold and unlikely to change, especially as all eyes will be on who will be the new Bank of England Governor. We expect investors to remain cautious with the wall of investment remaining on the side-lines over the coming period."