What next after Brexit?

The UK has formally given notice it will be leaving the EU, but the path forward is filled with uncertainty.

On Thursday 30th March, nine months since the nation voted to leave the EU, Prime Minister Theresa May announced: “There can be no turning back”.

But rather than bringing an end to the episode, the reality is we are only at the beginning. Article 50 is effectively a two-year notice period to depart from the EU, with the priority being to agree the terms of Brexit.

A wide range of details will be debated between the British government and EU ministers, with the Prime Minister outlining 12 negotiating priorities her government will focus on.

Most of these discussions are expected to take place away from the spotlight, but with Brexit such a major media talking point, it’s a topic that’s unlikely to fade into the background.

Even after the terms of Brexit have been agreed and the UK has formally left, the government still has to decide which EU laws to keep and which to discard. In total there are 80,000 pages of EU agreements to renegotiate. As they affect the way UK businesses currently operate, the implications around keeping and changing these rules could be significant.

“In the current climate, developing a balanced portfolio of investments could help you to achieve a smoother investment journey”

There’s no doubt that uncertainty is going to reign for a number of years – even after Brexit takes place. Leaving the EU is going to fundamentally change the UK. But in what way, and to what extent, no one can really know.

How could this affect your investments?

On the morning after the UK vote to Leave the EU, stock markets endured sharp falls. But since that point, it has been a relatively positive period for global markets.

Last year’s decline in the value of Sterling currency hurt many UK businesses (mainly those who rely on imports as part of their operational model), but Sterling has started to recover early in 2017. Investors with global assets – or who are invested in UK businesses that rely on exporting goods – have been able to benefit from the fall in Sterling.

Clearly, the outcome of the Brexit negotiations will have an impact on markets. For example one of the major areas of contention is trade deals. Right now, UK businesses benefit from being part of the single market, where goods and services can be imported and exported free from tax. Leaving the EU could mean businesses face significant costs to continue trading with Europe. This would hurt their profits and have an impact on stock markets.

Some sectors will be largely immune to the situation, such as domestic-focused businesses like estate agents and house builders. Others, who trade overseas, could continue to benefit from the fact Sterling is still weaker than it was for the moment; but their long-term fortunes might be tied to the UK’s ongoing membership of the single market.

Don’t neglect your own financial future

The uncertainty over Brexit might be an unavoidable part of life for the next few years, but that doesn’t mean your own financial future needs to be compromised. If you have major financial goals and are unsure of your ability to accomplish them, it could help to meet a financial adviser to review your plans.

In the current climate, developing a balanced portfolio of investments could help you to achieve a smoother investment journey. That way, even if areas of the market struggle due to Brexit-related developments, for example, you might have other areas of your portfolio still generating strong returns. An adviser can help you build a strategy that suits your individual needs.

It will also help to continue regularly reviewing your investments. That way, if the economic landscape and outlook shifts significantly, you can examine any impact this might have on your plans and make any changes needed.

The value of your investment can go down as well as up and you may not get back the full amount invested. Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. The Financial Conduct Authority does not regulate Taxation and Trust advice.