18
Dec
UK: A referendum as a last resort?
Worrisome decline in GDP growth (+0.1%). Theresa May has no plan B. Increasing likelihood of a referendum. Intolerable costs of a “no deal”. Avoid equities and bonds.
Key points
- Theresa May will play her last card in January
- Why not consider a plan B?
- New referendum to break the deadlock
- Only 34% of the British people are opposed to holding another referendum
- Brexit still weighing on the pound
- A -25% depreciation of the currency is possible in the event of a “no deal”
- Worrisome threats to GDP
- -10.5% decline in GDP and -30% drop in real estate prices in the event of a “no deal” according to the BOE
- PMI indices nearing the growth threshold
- BOE still in wait-and-see mode
- Poor prospects for pound-denominated bonds
- Stay cautious on equities
