Round one.

A draft Brexit withdrawal deal has finally been agreed between the EU and the UK (or more specifically Theresa May and the ‘collective’ of her Cabinet – which means it was far from unanimous).

However, it is worth emphasising that this draft deal, while a milestone, it is not yet an agreement.

And as a result, in the immediate term this ‘deal’ means very little:  while it was a victory for Theresa May yesterday (14 November 2018), there will obviously be many tough days ahead and plenty of twists and turns due to the considerable opposition to her deal.

The deal now needs to pass a number of political hurdles – which is unlikely to be an easy task as many of the MPs in opposition as well as a large number of Tories are currently likely to vote against the deal.  In fact given the number of government resignations we have seen today (currently six), a vote of no-confidence is almost certain, which could result in a leadership challenge and potentially a General Election (in which case MPs risk a ‘no deal’ Brexit, or a no Brexit at all).

It is also worth noting that if Parliament does eventually pass the bill (albeit with some amendments to appease backbenchers – both Tory and opposition), after just over two years of uncertainty, we would finally have reached the end of the beginning, which means we should start to see improvements in confidence, business investment and economic growth – although it is also likely that the Bank of England will increase interest rates quicker than previously indicated (one interest increase in 2019 and another in 2020).

In summary, while the media will no doubt be having a field day, it is important to stand back from the noise and short-term market volatility:  as your portfolio is diversified across a number of different asset classes with different investment characteristics and is actively managed by a dedicated Investment Management Team that constantly monitors the economic and market environment.

Ian Copelin, Investment Director