UK Post-election thoughts
A lot has been happened since I last blogged, in the political arena, in the economy, and in the global financial markets.
The good news is that if the Conservative Party hadn’t gotten a majority seat, the markets would likely be trading down relative to where they are now, so, the message is that ‘the markets’ have more confidence in the Conservative party in comparison to other political parties.
Other potential good news is that Ros Altmann, who is a recognised pension expert and lobbyist for people’s pension rights, has been made pensions minister in the new Conservative government.
Watch this space for more radical pension reforms.
The markets remain fragile and are likely to remain so for some time yet. Specifically, there is uncertainty over what will happen to the Eurozone and whether it will break up or limp on.
Also, whether the UK will remain a part of the Eurozone in the same capacity that we are now and what the implications are for both Europe and the UK, if we exit Europe.
In the run up to the referendum, if the UK vote polls indicate a yes vote to exit Europe then Mr Cameron will have strong negotiating leverage with Europe. However, the conundrum arises if we do actually vote yes, then Mr Cameron will have a very difficult situation to handle: Ultimately, Europe needs a strong UK, but, we the UK also need Europe as a trading partner and so the referendum is a double edged sword and reading between the lines we may be set for some turbulence in the form of uncertainty and market volatility over the next two to three years.
One possibility is that if the UK do exit Europe there may be a ‘structured break up of Europe’, as opposed to an ‘anarchic breakup of Europe’.
If this happens markets will likely suffer in the short term but every cloud has a silver lining and where there are issues in the form of major structural & political reform, there may be investment opportunities also.
The proposed UK referendum may now be held as soon as 2016, for more details see the guardian article below:
David Cameron may bring EU referendum forward to 2016[/vc_column_text][/vc_column]