BREXIT Uncertainty, but investment opportunities still exist!

The Brexit leave date has come and gone and the future of the UK relationship with the EU is plagued with uncertainty which looks set to continue, with a new deadline of Oct 31 2019.

Dafferns are members of AGN International, an association of 200 separate, independent accounting firms in 80 countries across the world and with a significant membership in the EU. This AGN Business Opportunities Bulletin looks at some of the few positive business opportunities from the BREXIT fiasco.

WHAT DOES BREXIT UNCERTAINTY MEAN FOR UK AND EU BUSINESS LEADERS? 

The UK Prime Minister’s resignation only serves to confirm the now familiar message to business i.e. that they must continue to plan for uncertainty:

• In the near term, consider exposure to possible disruptions in movement of good/services for both suppliers and customers, model scenarios of price changes (whether through logistical costs, tariffs & taxes or exchange rate movements) and consider if changes in mobility of people might impact the workforce or customer base.
• Thereafter, think about scenarios for the possible opening up and closing down of opportunities in various markets, how the competitive landscape might alter and, perhaps in addition to planning for the downside, consider what upsides might present themselves?

UPSIDES, WHAT UPSIDES?!

So what ‘upsides’ can there be to any of this? Well, there are a few unusual pockets of investment opportunity that remain and flourish!  There are also some that could benefit from some forms of Brexit.

1. Prime property
   Only a no deal Brexit, the default position if nothing can be agreed, will endanger the UK property market, particularly in London and the major cities. The Heathrow expansion, HS2 and the completion of Cross Rail all provide reasons for optimism for carefully selected property investment.  Some property prices are presently settling as the machinations of the Brexit negotiations continue, but strong rental demand in certain prime areas is likely to remain high, so value for money could be had, especially if buying in foreign currency if sterling falls.
2. Advertising and Creative Industries
   UK remains a key world hub for some industries. The IPA (Institute of Practitioners in Advertising) Bellwether Report for q1 2019 stated the balance of advertisers reporting increased marketing budgets grew to +8.7% compared with +0.0% in Q4 2018. Significant growth was reported across all categories aside from market research, sales promotions and direct marketing. Reason here for optimism about investment opportunities in the sector, but also for the UK economy at large.
3. UK Equities
   A weaker pound means companies that are major exporters enjoy a relative advantage because its products become cheaper overseas – many of the FSTE 100 and 250 fit this bill. There’s also a profit boost when this money is repatriated. This is why the stocks that have tended to be strongest this past year have been big exporters, leaving many domestic U.K. stocks looking quite undervalued.
4. The UK Tech Sector
   European investment in the British tech industry surged last year as the sector shrugged off Brexit uncertainty. Cash injected from Europe jumped to a record high of £1.89 billion in 2018, up from £1.66 billion in 2017 according to new data from law firm Penningtons Manches. The EU remains confident in the long-term prospects of the sector in the UK, the firm said, as the value of deals involving at least one EU investor rose to £1.53 billion, from £1.26 billion in 2017. driving the city’s digital infrastructure and preparedness for a connected future.

AGN International Ltd is a company limited by guarantee registered in England & Wales, number 3132548, registered office at 24 Greville Street, London EC1N 8SS, United Kingdom. AGN International Ltd (and its regional affiliates; together “AGN”) is a not-for-profit worldwide membership association of separate and independent accounting and advisory businesses. AGN does not provide services to the clients of its members, which are provided by Members alone. AGN and its Members are not in partnership together, they are neither agents of nor obligate one another, and they are not responsible or liable for each other’s services, actions or inactions. This communication is generic in nature, for general information only and does not constitute professional advice. It should not be relied upon in arriving at any decision, and no responsibility is accepted. Salient facts should be verified and professional advice should be taken before taking or refraining from any course of action. Copyright © 2019 AGN International Ltd, All rights reserved.