Brexit effects hard to quantify as COVID-19 blurs the waters

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The reality is that the markets “sort of rejected it,” Andrew Jackson, head of fixed income in the international operations of Federated Hermes Inc. in London, told a virtual panel on June 17. While Brexit is relevant, it can be “bad, can be good, but only slightly bad or good,” he said. Companies have anticipated the official release, managed the risks and communicated them well, Jackson added. Federated Hermes has $ 625 billion in assets under management.

But concerns remain, including the impact of ‘rules of origin’ – the need to demonstrate that goods originate in the UK or the EU before they can be distributed – on supply chains and ‘l ‘uncertainty about the treatment of certain parts of financial services. the risk is that a combination of rules, friction and continued uncertainty undermines business investment, ”Mr. Roe said.

Ms LaRusse from Insight said there is evidence of delays in getting goods to the UK, which is affecting costs. She also cited the rules of origin protocol as a risk. “There is some evidence to suggest that there is friction in the system, which is causing trade to decrease, and which could harm the UK economy,” she said.

And Mr Jackson d’Hermès added that supply chains will continue to be disrupted. “But I think in some ways last year has been a good time for Brexit to happen – there has been a global pandemic and some of these supply chain effects have gone unnoticed “, and the markets have pulled” all the bad news together into one big chunk, “he added.

And any other bad news that would cause the pound to fall further would actually raise domestic stock prices, as around 70% of the income of companies listed on the FTSE 100 is made overseas, RLAM’s Mr Greetham said.

Christian Kopf, Frankfurt-based Head of Bond and FX at Union Investment Institutional GmbH, believes Brexit “is now largely integrated into financial markets. In fact, we believe that after lagging global equities for many years, UK equities now offer good potential as valuations look attractive. “

This is especially true for mid-cap stocks – those listed on the FTSE 250 index – “which tend to perform well in economic recoveries. But even large caps now look cheap by historical standards, ”he said in an email. Union has 386 billion euros ($ 467.4 billion) in assets under management.


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