The post-election economy


As we saw last week, the third general election since 2015 ended in a decisive victory for the Conservative Party, which now has a very solid majority in the House of Commons. The majority of the remainer Conservatives were ejected before the election, leaving Mr Johnson with a united party supporting his dealings with Brussels. He will no longer need to arrange coalitions of unlikely bedfellows to get anything through Parliament, and probably has exactly the negotiating hand he wanted.

But at Continuum we are looking at what it might mean for your money.

A pre-Brexit boost

The financial world felt that the result was good news. Shares and the pound both rallied as soon as the financial markets opened last Friday. Many UK companies surged in value in the biggest day’s trading volumes in two and a half years.

The FTSE 100 index of blue-chip stocks closed 79 points higher at 7353 points, its highest point since the end of November. That was a 1.1% gain while the FTSE 250, which has a greater focus on domestic businesses, saw gains of more than 5%.

Digging into the figures, it looks as though housebuilders, utilities and banks all enjoyed particularly dramatic rallies, with investors seeing a brighter future for the economy.

This is of course good news, if you are an investor with the right spread of shares in your portfolio. A cynic might suggest that this pre-Brexit boost has more to do with relief that a Labour victory, and consequent re-nationalisation, significant spending plans – and potentially more Brexit indecision – has gone away.

The hope seems to be that the UK economy will pick up as the threat of a disorderly Brexit reduces.  But it could be what actually happens over the next few weeks and months which will have the real impact.

The UK is almost certain to leave the EU by 31st January, according to Boris Johnson’s campaign promises. Markets were broadly happy with his proposed deal before the election was called.  Now he has the mandate and personal authority to deliver it.

However, we still don’t know exactly what form Brexit will take, or its effect on our personal finances.

Will there be a Brexit boom?

It looks as though the crucial factors now will be the details of Brexit as thrashed out by Mr Johnson’s team. Brexiteers have always insisted that deregulation would be the main benefit of Brexit, although the EU will continue to insist that unfettered access to the EU single market will only be possible if a ‘level playing field’ can be delivered.  Only when the future regulatory and trade environment is agreed will UK/ EU trade relations and UK/third party trade relations be fully understood.

The prospects may be positive. Lifting of political uncertainty is already luring some investors to Britain, claimed Chancellor Sajid Javid.

What about your own personal boom?

At Continuum, we believe that financial success depends less on the broader economy, than on having a sound personal investment strategy.

We want to help you build that strategy and put it to work – whatever the broader economy does. We can provide expertise and market knowledge to support your plans, and an investment portal to help you keep track on your investments.

Even more important, we can give you personal support from an expert Independent Financial Adviser. Their knowledge of the markets, and sound investment techniques could help you make the most of your money whatever the post-election future has in store.

To start planning your own financial boom, call us at Continuum now.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.

The value of investments can fall as well as rise and you may get back less than you invested.

 

References:

https://www.theguardian.com/business/live/2019/dec/13/markets-surge-pound-ftse-conservative-election-triumph-trump-us-china-trade-deal-business-live?page=with:block-5df3befd8f08c39722639dc0

https://www.proactiveinvestors.co.uk/companies/news/909156/ftse-100-closes-higher-on-trade-deal-news-and-uk-election-result-909156.html

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