The chances of “getting Brexit done” reasonably quickly and smoothly have never been better.
Allianz GI / Victory for Prime Minister Boris Johnson’s Conservative party in the UK general election is likely to be welcomed by markets and potentially boosts prospects for the UK economy. It doesn’t, however, end the Brexit uncertainty overnight – and the UK continues to be vulnerable to a late-cycle global environment.
David A. Meier (Julius Baer) | Prime Minister Johnson’s Conservative Party grabbed a commanding victory. An orderly Brexit based on the withdrawal agreement is highly likely on 31 January. Given plenty of looming uncertainties during the transition period, such as the final UK-EU trade relationship and Scottish appetite for independence, we stick to a Neutral short-term British pound outlook.
“If the conservatives of Boris Johnson obtained the majority in the Parliament, the agreement of exit of the prime minister would return to the agenda of the new House and probably it would be approved. The United Kingdom will then begin the transition period (which in principle extends until the end of 2020) during which the future relationship with the EU will be defined,” analysts at Degroof Petercam point out.
D. A. Meier (Julius Baer) | Based on a lead in polls, a Conservative majority is highly likely. Labour’s socialist manifesto seems too radical to spur a full catch-up. A hung parliament remains a considerable risk. After a Conservative victory, a moderate fiscal boost could limit the Brexit fallout. After a Labour win, its political agenda could erode its huge fiscal spending plans, despite a softer Brexit.
Olivier de Berranger (La Financière de l’Échiquier) |”Let’s have fun”. Have the words of President Charles de Gaulle been prophetic? He was against the United Kingdom’s entry into the Common Market in 1963… More than 50 years later, although the tribulations of Brexit may cause amusement or disappointment, the truth is that they have been poisoning investors’ lives for more than three years, by separating them from British stocks. However, the outcome of this endless soap opera could well change the situation.
David Alexander Meier (Julius Baer) | Thursday’s EU summit is the last date to secure a deal before Saturday’s ‘deal or delay’ deadline. Due to difficulties in finding a deal and parliamentary ratification, we rather expect a delay. We remain short-term Neutral on the pound given a delay and long-term Bullish, as the only way to Brexit is through a deal.
Ana Fuentes | After various decades in the private and public sector, Josina Kammerling, responsible for regulation at the CFA Institute, knows in detail the ins and outs of the financial market and its rules. She can therefore indicate its pros and cons. And do so in fluent English, Dutch, French or Italian … And also in perfect Spanish learnt as a girl in Burgos, where she moved when she was two: “My father opened the Heineken factory there” she recalls with a smile.
Johannes Müller (DWS) | Three months ago, we warned that: “The outlook for the world economy is getting cloudier. Escalating trade tensions could trigger further downgrades.” Sadly, this has now come to pass. In several export-oriented economies, notably Germany and Japan, we had to cut our growth forecasts for both 2019 and 2020. For the U.S., we have left our 2020 forecast unchanged at 2%, but now expect just 2.3% for 2019, 0.2% less than three months ago.
Experts at UBP believe that fiscal stimulus or, more effectively, fiscal- monetary coordination presents the most potent upside catalyst to risk-assets.