And so the saga continues. 33 months since the UK public voted to leave the European Union (EU), the path to Brexit remains uncertain. The departure date has been delayed until 31 October – so what does the deadlock mean?
It was never going to be easy, finding a way to leave the bloc where all sides got what they wanted. But the deal agreed between Theresa May’s government and the EU has proven unpopular across all shades of the Leave/Remain debate. The crucial sticking point – the 310-mile border that Northern Ireland shares with the Republic of Ireland – currently makes it very difficult to physically separate the EU and the UK. It is a very complicated issue.
So what happens next?
For UK markets and businesses, the short-term clarity of continuing to be a member of the EU – abiding by its laws, access to the European Single Market (where products and services can be traded tariff-free) and retaining freedom of movement – brings back some clarity. The spectre of a no deal Brexit – where the UK leaves with no trade or customs deal in place – also appears much less likely.
More certainty is always welcome by markets. Not surprisingly, it has been an up-and-down six months for the major UK indexes. But for a wide range of other factors, at the time of writing they’re edging back towards the high levels of last summer. Global markets have also had a good period.
The value of UK Sterling – which has endured a major hit since the Referendum in 2016 – has also been on rise since the beginning of the year.
But of course, with investing it’s all about the long-term outlook. Nothing has really changed with this delay, at least for now. The options for leaving the EU remain the same. And that means the same debates are likely to continue.
Whilst the UK government and EU counterparts now have more time to find new solutions to solve the sticking points, a formal Brexit remains the objective. And that means significant change could occur eventually.
So what should investors do?
At Skipton, this has been a regular question from our customers. The uncertainty of the Brexit process has led to some delaying reviewing their investments, or from making firmer long-term plans.
Yet as Scott Ashworth, Skipton’s technical research manager, argues:
There’s a risk of allowing the background noise of Brexit to override your own investment decisions. And by not having suitable long-term plans, you could miss out on achieving your goals.
The bottom line is Brexit could take several years to fully settle down, even if a deal is agreed by all parties. Ultimately, investing is about you and what you want to achieve with your money. Market events like Brexit may have some impact on your ability to realise your goals, but putting your plans on hold could be damaging to your financial future.
Depending on your circumstances and needs, a diversified investment approach could help. This means having your money invested into a range of assets and global regions. It can reduce the impact of assets which are under-performing, as you’ll have holdings elsewhere that might be performing better.
The bottom line is there are always wider factors – domestically and globally – that can affect the performance of your investments,” Scott concludes. “What matters is finding approach to investing that’s right for your circumstances, and keeping focused on that. Investing is about your next few years, not the next six months.
Brexit is one of the most defining moments of the UK’s modern history, but it needn’t define your financial future. This delay in Brexit could be an opportunity to take stock of your current savings and investments and plan for your future.