An important update from your financial advisor

Once again we have been hit with an event that is causing uncertainty and volatility in the international economy and spilling over into our economy.

Against the run of the opinion polls and the betting markets in the final few days before the vote, the people of the United Kingdom (UK) have voted to ‘Leave’ the European Union (EU).
The official tally of the referendum showed the ‘Leave’ camp received 17,410,742 votes, which was approximately 51.9% of the total. ‘Remain’ took 16,141,241 votes, 48.1% of the total. Voter turnout was a very high at 72%, above the 66% seen in the 2015 General Election.

The process to ‘Leave’ the EU is likely to take at least two years, once the UK Parliament invokes Article 50 of the Lisbon Treaty (the Treaty of the European Union). However, the timing of this is uncertain, with the ‘Leave’ campaign suggesting that that they would begin informal negotiations before activating Article 50 and MP Boris Johnson stating that there would be “no need for haste” in negotiating Britain’s exit.

In addition to negotiating their withdrawal, the UK would also need to negotiate post-exit arrangements with the EU on issues such as trade, regulation and immigration. When taking into account the complexity of this negotiation process and the involvement of all 27 remaining EU Member States, the two-year period appears limited.

While it is true that the period can be extended, this would require the agreement of all 27 remaining EU Member States and there is a high probability that this would not be forthcoming. At the end of the two-year period, the UK will cease to be a member of the EU and all related treaties and agreements will halt whether or not replacement agreements or treaties are in place.

This uncertainty is one of the key risks around the ‘Brexit’, as it is not clear what the arrangements would look like post-exit, or if indeed any will be agreed before the UK formally leaves the Union.

We have attached two articles that explain in more detail the implications and opportunities of the “Brexit”: (Click on the story below to be directed to the article).

1. Shane Oliver’s perspective on the “Brexit” – implications for the world, and his thoughts on short term opportunities. 
2. An insights paper from AMP Capital that further explains the medium term perspectives across different asset classes and putting market moves into context.

If you have any questions or would like to discuss your situation, please do not hesitate to call or email us. Also, please feel free to share these articles with any of your family or friends if they would also like to understand more about the implications and opportunities of the “Brexit”.

Yours Sincerely,

The team at MFM Group