Health warning: please avoid this article if you’re not ready to laugh about the past week yet…
Over the past week, electing to leave the EU and being unceremoniously booted out of Euro 2016 has left me feeling a bit deflated. However, I think it’s important to look ahead at times like this and work out whether things have gone wrong and, more importantly, what the impact will be in the future.
On Friday (as it was on Monday), it appeared that confidence was at an all-time low. The FTSE 100 got Kane-d, posting its biggest one day fall since October 2008. Falls in Sterling have also been well documented over the week (both against the dollar and against Hannes Thór Halldórsson).
However, these headlines in isolation ignore the fact that equities and GBP Rose strongly over the previous week in the “Remain Rally”. Taking this into account, the actual short term impact (i.e. over the course of a week or so) of the Leave result on markets was surprisingly Small(ing).
Investment expert @williamrwparry from @XeroxHR Insights plays on the similarities between #Brexit and #EURO2016 http://ctt.ec/4yK0k+
Looking longer term, matters are less clear. Before the referendum, economists were uncharacteristically aligned in the majority: Following a successful Leave result, the Dier UK economy will have a huge (Ca)hill to climb.
That being said, following the event itself, government ministers have already started to row back on the severity of their negative predictions. Following Cameron’s announcement that the big decisions will be left to the new management team, markets seem happier that we won’t do anything Rash(ford). For instance, new policy makers might use this as a reason to loosen a tight fiscal policy programme.
All very difficult to predict and we’re likely to be in for continued periods of large day to day volatility. Market mispricings will create opportunities and I’ll be speaking to my clients about these.
Importantly, don’t lose Hart in investment (only in goal…).
Your turn: Have you noticed any other similarities between Brexit and the EURO 2016? Have your say in the comment box below.