UK Election 2019: Expect the pound and UK financial assets to be increasingly volatile

The pound and UK financial assets will be volatile in the run-up to Britain’s first December general election since 1923 – and will remain so in the event of another hung parliament.

This is the warning from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory organizations, as opposition party Labour announces it is now backing the government’s bill for aDecember election, regardless of the date.

Mr Green comments: “This is a critical stage in the slow-moving, damaging, torturous Brexit saga.

“Expect the pound and UK financial assets to be increasingly volatile in the run-up to the general election, given the wide-ranging set of outcomes.

“The most detrimental of these outcomes for sterling, UK financial assets and the wider British economy, include another hung parliament or a victory for Jeremy Corbyn’s Labour party.”

He continues: “Boris Johnson’s intention to secure amajority within the House of Commons is by no means guaranteed.  

“The Brexit Party will use the fact that Mr Johnson did not deliver Brexit by October 31 – something on which he staked his whole premiership. 

“The Remain vote could also be split between Labour, the Liberal Democrats, the Greens and the Scottish National Party. 

“Political fragmentation on this scale has never happened before in the UK.

“Therefore, a hung parliament looks like an alarming possibility, meaning there could be no majority to quickly and smoothly resolve the Brexit chaos.

“Should grinding deadlock continue, the UK economy would still haemorrhage investment and confidence. The fallout of Brexit has cost the UK three and a half years of lost opportunity and many, many tens of billions of pounds. This would only intensify with another hung parliament.”

He adds: “Meanwhile Jeremy Corbyn’s Labour party will campaign on the most radical, left-wing manifesto in more than a generation.

“Should he win this election, his anti free-market policies – such as the re-nationalisation of industries from utilities to railways to postal services, and the forcing of companies to give 10% of their shares to staff – plus his high-tax policies, including a possible wealth tax, will spook the financial markets, hit long-term sustainable growth of the British economy, put more pressure on UK financial assets, and lead to a significant sell-off of the pound.

 

 

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Mr Green concludes: “The general election is set to be the most contentious and uncertain in generations. Investors now need to protect and build their wealth and assets by ensuring they are properly diversified across asset classes, sectors, currencies and regions.”



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver