The investment industry has broadly welcomed the outcome of the UK general election saying that it makes a ‘hard’ Brexit less likely and this could allow UK financial firms to continue to sell their products across the EU single market.
But industry analysts have expressed concern over the greater uncertainty that the result will likely mean as negotiations with Brussels over the UK’s divorce from the EU get underway.
Ian Kelly, chief executive of Augentius, said: “A coalition or even a minority government may lead to a softer negotiation, which could bring with it benefits – perhaps opening the door to allow UK domiciled funds to be passported into Europe.”
Meanwhile, Viktor Nossek, director of research at fund manager WisdomTree, said that the 2% plunge in the value of sterling underlined that the result of the election had come as a shock to markets.
“There will be no notion of ‘strong and stable’ in currency markets after this vote. The pound has tumbled overnight, and this could be just the start, with volatility likely to remain elevated,” he said.
“The vote also kills off the notion of hard Brexit, and means months of fractured negotiations within Parliament over the final terms the UK pushes for with Europe.”
Nigel Green, chief executive of independent financial services firm deVere, said that the election result was a “hammer blow” for a hard Brexit.
“Mrs May no longer has the ability to deliver on this as she did even 24 hours ago, for two key reasons.
“First, the British people have spoken and largely rejected much of the Conservative manifesto which championed a hard Brexit.
“Second, the leader of the Democratic Unionist Party, which is joining forces with the Conservatives to form a coalition government, have said they will not back a hard Brexit.”
“The financial markets had almost already priced-in a hard Brexit and will now have to quickly reassess their position.
“As this adjustment takes place we can expect the uncertainty in the financial markets not only to continue but to intensify.”
©2017 funds europe
