Industry reacts to ‘agreed Brexit deal’

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Oct 17, 2019

Prime minister Boris Johnson said he has agreed the terms of a Brexit deal with Brussels. This paves the way for a vote in the House of Commons this Saturday.

Johnson tweeted: “We’ve got a great new deal that takes back control — now parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment.”

He added: “This new deal ensures that we #TakeBackControl of our laws, borders, money and trade without disruption and establishes a new relationship with the EU based on free trade and friendly cooperation.”

He said the deal takes back control while under the previous negotiation “Brussels maintained ultimate control and could have forced Britain to accept EU laws and taxes for ever”.

The DUP has warned it will not support the deal, Labour has called for it to be rejected and the Lib Dems have said “the fight to stop Brexit is far from over”.

The UK and EU have been working on the legal text of a deal, but it will still need approval from both the respective parliaments.

European commission president Jean-Claude Juncker has described it as a “fair and balanced agreement”.

Industry experts have warned to be cautious about the deal as Johnson could struggle to get it approved in parliament.

Industry reaction
  • Investment platform Willis Owen head of personal investing Adrian Lowcock

“Boris Johnson’s announcement of a great new deal has gotten currency markets excited but investors should be wary, we have been here before and it didn’t end well. There is still a lot of work to be done. However, what is clear from the initial reaction is that the Brexit issue has been weighing on the UK currency and indeed stock market. Events over the weekend will be the deciding factor.

“Whilst investors shouldn’t get too excited if a deal is done, there is the potential for markets to rally quickly on the news. The UK market has looked cheap for a while and there are some attractive opportunities. However, because there are still many risks, the best course of action is to be diversified as this will give you the flexibility needed to navigate a complex situation.”

  • Interactive Investor head of markets Richard Hunter

“It’s not all over ‘til it’s over – reports of an agreed deal have yet to get through European and UK parliaments and the DUP position remains unclear – but there is no question that this represents progress. Sterling has unsurprisingly strengthened since the announcement, and the domestically focused UK stocks which are in the Brexit firing line are also motoring ahead. These are mostly typified by the property/housebuilding and banking sectors, where for example Persimmon shares are ahead by nearly 5 per cent, British Land over 4 per cent, RBS 3.5 per cent and Lloyds Banking 3 per cent.

“It remains to be seen whether the reaction is short-lived as the politicians go toe-to-toe again at the weekend, but in the meantime the very possibility of an agreed outcome to the painful Brexit saga has resulted in a relief rally, both financial and psychological.”

  • Investment Association chief executive Chris Cummings

“Today’s deal provides welcome certainty to the investment management industry and the millions of savers and investors it serves. Now a new deal is on the table, it’s important that politicians on all sides come together in order to avoid the damaging effects of a cliff edge no deal. This renegotiated deal provides the welcome certainty our country needs to safeguard the future of many industries including our own and the customers we serve. It will also ensure we retain our position as a world-leading centre for investment management which will be critical in the post-Brexit world.”

  • Federation of Small Businesses national chairman Mike Cherry

“After three years of uncertainty that has stalled planning, hampered investment and slowed growth, a last-minute Brexit deal now seems within reach.

“Many small businesses will be relieved that there now appears to be a credible pathway towards securing a deal that avoids a chaotic no-deal on 31 October and guarantees a transition period, which smaller businesses need to adapt to the UK’s future relationship with the EU.

“Of course the devil will be in the detail and we will now take time to examine the intricacies of the deal to make sure it works for all small businesses across the UK.

“Our members are saying that a no-deal Brexit on 31 October, or ongoing uncertainty, will hit them hard – making it difficult for them to trade, invest, hire staff and ultimately survive. With thousands of smaller businesses feeling unable to prepare for a no-deal scenario in 2 weeks’ time, avoiding this outcome remains of paramount importance.

“The security of a transition period, meaning only one set of rule changes in the future and time to prepare for our new relationship with the EU, is vital. It will provide much needed certainty and allow firms to press on with any paused planning and investment plans.

“We have been here before, however, and although both the UK government and EU have shown determination and a willingness to progress negotiations and deliver this breakthrough – we now need to see this continue if we are to reach a successful Brexit endgame. The government and parliament must now work together to ensure this is best deal for the UK small business community.

“If the deal is passed – focus needs to turn quickly to the future relationship and ensuring that lessons are learnt from the experience of the last three years.

“Many small businesses are just about surviving – not only do they desperately need certainty but they also need the government to get back to business and focus on meeting the many domestic challenges that have fallen behind Brexit.”

  • JCRA associate director Andy Scott

“Sterling received another leg higher this morning after a Brexit deal was finally reached. While many in the market and the country will breathe a huge sigh of relief, after it appeared the DUP had once again scuppered the agreement, there is no doubt a high degree of caution among investors as the UK parliament has yet to have its say.

“Sterling has seen a dramatic couple of weeks. Rallying 6 per cent versus the dollar and 5 per cent versus the Euro from its lows last Thursday, the currency’s best performance against the dollar since 1985. However, sterling still remains relatively weak. At the current level of 1.29 versus the dollar and 1.16 versus the Euro, sterling is still down 13 per cent and 11 per cent respectively compared to its peak on the eve of the referendum result. If the deal gets through parliament, we would expect the clarity it provides for a transition period to result in some further gains for sterling, though the hit to economic growth from falling business investment and uncertainty will likely remain a concern.

“The fog of Brexit should now finally start to lift, providing a more certain path for businesses to plan and invest again, as well as a more stable and therefore more attractive currency.”

  • deVere Group chief executive Nigel Green

“The pound has soared above $1.29 for the first time since May on reports that a Brexit deal has been reached and UK stocks are boosted in a relief rally.

“However, the rally is currently being tempered as it needs to get through the UK and EU parliaments.

“There does seem to be some question marks remaining over the DUP’s support, which is, of course, critical to getting the deal through the House of Commons.

“That said, there does seem to be a growing sense of optimism that it can get approved.

“If this deal is ratified, we can expect the pound to jump sharply. It is 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 will also rally, particularly given the attractive valuations of many UK companies.

“However a strong pound may dilute the impact on exporters, as their earnings in dollars and euros, among others, will become less valuable in sterling terms.

“There is potential for a significant relief rally for the pound and UK financial assets if this new Brexit deal is approved.

“However, even if it is passed, this is really just the beginning – not the end.

“As such, investors need to protect themselves from market uncertainty and also best-position themselves for the inevitable opportunities through exposure to a broad range of assets, currencies and geographic regions.”

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