Newspaper article The Journal (Newcastle, England)

Keep Calm Is Message for Business Post-EU Referendum; SHARE WATCH Andrew Miller

Newspaper article The Journal (Newcastle, England)

Keep Calm Is Message for Business Post-EU Referendum; SHARE WATCH Andrew Miller

Article excerpt

THE UK voted to leave the EU last week to the evident horror of financial markets, where change is rarely welcome.

European equities and sterling had rallied significantly in the run up to Thursday's referendum, as pollsters and bookmakers pointed increasingly towards a Remain vote being the most likely outcome. All of that and more is now being given back amidst jittery markets, with gold, the Japanese yen and the safer corner of the bond market all prospering.

Our advice to clients is to remain calm and we retain our view that the impact of an exit from the EU on the UK economy will be unhelpful but digestible.

With the UK contributing around 3% to the world's output, this difficult period should not meaningfully alter the trajectory of the global economy, where steady if unspectacular growth remains our base case. Those arguing for a return of redenomination risk in Europe may again be underestimating the commitment of its major players to keep it together. The last few years in particular have surely taught us that the social and political fabric of the European Union can bear a lot more stress than we might have previously imagined.

For investors, stay invested and diversified. A period of uncertainty and volatility is assured, however the prospects for global growth and inflation continue to be underestimated. Bizarre though it might seem to suggest in light of the market chaos today and much of the accompanying commentary, but it may be those prospects for growth and inflation that are still more important for portfolio returns on a six to 12-month view.

Some of those agitating for an exit from the EU increasingly promised to return the country to the 'halcyon' days of the 1970s and before, when the UK still made 'stuff.'.

Meanwhile, those urging a vote to remain warned of an immediate recession, widespread job losses and an end to the peace and stability enjoyed by the continent for much of the post-war period. …

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