Brexit Update

The U.K.’s Supreme Court has deemed the Prime Minister’s suspension of Parliament to be unlawful so Parliament has reconvened. The rule of law has stamped its authority on the British constitution and the highest court in the land has offered some guidance on the limits of political will within the democratic process.

The Prime Minister’s position has weakened substantially and there are calls for him to resign and the potential for a Vote of No Confidence has increased. The ongoing scrutiny of the Prime Minister is likely to intensify but the countdown to the Brexit deadline of 31st October continues and much still depends on the government being able to secure a deal with the EU at the council meeting on the 18th and 19th October. There is then a small window to get any deal passed through Parliament by the end of the month.

The Supreme Court’s ruling may have bought Parliament some time to delay the Brexit deadline until the 31st January. If there is a delay, then we can expect a General Election in November or December, which will add further complexity and uncertainty to the Brexit process.  The court ruling may also drive Boris Johnson to find a deal that is acceptable to both the EU and Parliament so that the Conservative party has a better chance of winning an election. The prospect of “no deal” has faded slightly now that legislation has been passed in Parliament to prevent such an outcome and Parliament can no longer be suspended in order to push through a “no deal”.

The situation remains fluid and we are not, therefore, taking a speculative stance on the final outcome of Brexit. As such, clients’ portfolios remain defensively positioned and well insulated from the uncertainties of the Brexit process and the extremities of a good or bad outcome. Our global approach to investment management means there is no U.K., or “home” bias, thereby avoiding overexposure to singular risks such as Brexit within portfolios.

Please do not hesitate to contact us should you have any questions regarding Brexit or any other issues that you may wish to discuss.