It is increasingly difficult for investors to get a clear idea of the potential implications of the UK leaving the EU with no deal.
Most economists believe the harder the Brexit deal, the greater the adverse effect on the UK economy, certainly in the short to medium-term.
This speculation and uncertainty is worrying for investors but, according to one of the region’s top IFAs, a ”˜no deal’ Brexit should not affect pensions and ISAs.
“It is highly likely that you will be able to trade-in or liquidate your investments as a result of a ”˜no deal’ Brexit,” said Antony, Senior Adviser at Robertson Baxter. “Most pension and ISA funds are listed investments on major global exchanges and they will continue to trade without restriction.
“Sanctions and capital controls to restrict the ability to sell are extremely unlikely as these measures are usually only for pariah states or collapsing economies.”
“And it is the case that many investment managers are able to freely invest in Hong Kong, South America and the US even though the UK only has limited trade deals with these countries and this is unlikely to be affected by a ”˜no deal’ Brexit,” he added.
“A hard or ”˜no deal’ Brexit could mean interest, and therefore savings rates, will remain low or even reduce in an attempt to boost the economy. Companies that are mainly reliant on the UK economy may well suffer the most.”
However, Antony is sceptical that the UK will leave the EU without a deal. Economists believe there will need to be a compromise between the UK and the EU as a ”˜no deal’ exit will hurt both economies.
“A ”˜no deal’ is possible but I think negotiations will go to the wire and a deal will be made,” he said. “Due to the last-minute nature of the deal, a second referendum will be unlikely, even if just for logistical reasons.
“The late deal will mean UK investments will remain uncertain and volatile over the coming months.
“There could be a short-term rally in UK markets and sterling if a deal is achieved, but the longer-term affects remain unknown. Overseas assets that are not subject to binary political events look attractive.
“A well-managed, geographically and sector diverse portfolio is therefore more important than ever.”
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