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New British PM: Where next for Brexit?

Leigh Himsworth

Leigh Himsworth - Portfolio Manager, Fidelity UK Opportunities Fund

Boris Johnson becoming leader of the Conservative party puts an end to a drawn-out leadership contest. But the new prime minister’s options on Brexit remain broadly the same as his predecessor’s. Our eyes remain firmly on the pound, which has fallen sharply against the dollar and euro this month. Meanwhile, with UK stocks cheap relative to peers, this period may go down as one of the all-time best opportunities to invest in UK equities.

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Brexit options

With Boris Johnson as prime minister, the options facing the UK on Brexit remain broadly unchanged: a Withdrawal Agreement similar to that presented by Theresa May; a general election to win a greater majority for the Conservative party, or a new referendum.

The outcome will depend on how confident Boris feels in his own political power. His support of the Leave campaign gives him leverage over the right wing while the bluster may win Labour Leave voters. His personal background may help him retain the Tory heartland. But the key question is whether he will be able to extend his charm over the Channel.

Implications for the financial markets

As far as financial markets are concerned, our eyes remain firmly fixed on sterling, which is reacting, almost by the minute, to the deal/no-deal narrative. And while it is easy to argue that the UK equity markets offer great value versus their peer group, this is especially true of a deal or new referendum scenario. The jury remains firmly out regarding a no-deal as this would be too much of a step into the unknown.

We may well look back in a few years’ time and regard this period as quite simply one of the best opportunities that we have seen to invest in UK equity markets.

More on Fidelity UK Opportunities Fund

Important information

The value of investments and the income from them, can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.