Brexit Update: Speaker’s refusal
Speaker’s refusal won’t hit pound but inflicts more uncertainty on business and economy
The pound will experience a short-term relief rally, but John Bercow’s refusal to allow a Meaningful Vote on the new Brexit deal will further weigh on the UK economy.
This is the stark warning from Nigel Green, the CEO and founder of deVere Group, one of the world’s largest independent financial advisory organizations.
His analysis comes after the Speaker of the House of Commons says there will be no Meaningful Vote on Monday, saying it is the “same matter” and therefore cannot be put to MPs again.
Mr Green comments: “The pound experienced a small knock to the downside, but barely. There was no major surprise.
“This underscores that traders are waiting patiently because they expect the EU to grant an extension to Brexit in the coming days.
“When this happens, we can expect sterling to rally more significantly.
“I also stand by my prediction that should the Prime Minister’s deal be ratified, we can expect the pound to jump sharply. It would be likely to hit at least $1.35 as the prospect of a no-deal, and/or months of further uncertainty ends.
“Sentiment towards UK stocks would also rally, particularly given the attractive valuations of many UK companies.”
He continues: “Whilst the pound remains largely unmoved, the decision by the Speaker could inflict further damage to the UK economy as the precedented uncertainty and chaos continue to drag on.
“Wealth, jobs and opportunity-generating businesses – both in the UK and internationally- are crying out for certainty.
“Brexit uncertainty is seriously denting business investment and confidence in the UK – and the fallout of this has cost Britain three and a half years of lost opportunity and many tens of billions of pounds.
“It could take a decade or so to recover, even if that recovery of certainty starts now.”
Mr Green adds: “Britain is losing its edge in a competitive global economy with the Brexit deadlock and politicking. It is likely to underperform against peers for many years to come.
“And on top of it all, despite some reports to the contrary, there is still the risk of a no-deal Brexit which would further compound the less-than-idyllic current situation. The reason this risk remains is that the EU may not agree to an extension and parliament has not agreed the deal.”
The deVere CEO concludes: “Whilst the pound, the so-called Brexit bellwether may not be impacted too significantly by the Speaker’s refusal to allow a Meaningful Vote on Monday, the wider economy will be impacted due to the damaging ongoing uncertainty it creates.
“It is perhaps therefore unsurprising that UK and international investors in UK assets are responding to the uncertainties posed by Brexit by considering removing their wealth from the UK.”
