Brexit The Era of Opportunity

August 23, 2019

The question of Brexit and it's impact on the British Economy will continue for at least a decade.

 

In addition many economists and market analysts are forecasting recessionary pressures. This is due to the bellwether of an inverted yield curve on the US 2 and 10 year treasury bonds.  Obviously Gold is seen as a safe haven, but Government bonds in an age of low interest rates and rising inflation are in question.

 

 

 

The challenge for Investors is how to achieve above average returns during such a turbulent period. High Inflation  + High Employment but Low interest rates superficially look grand yet have the hallmarks of a Bubble awaiting to be burst. Central Banks do not wish to increase interest rates to deal with the high inflation. If they were to increase interest rates the pack of cards would come tumbling down with a CRASH. They must tread carefully, despite the pressures of political leaders. With interests so low there is not much more the Central Banks could do in the event of a downturn. If they increase the rates they may push the economy over the edge. Further danger could be due to the fact that the City of London accounts for over 20% of the UK's GDP, yet it's the financial sector that is having to make the main adjustments for Brexit. Forget the "Back Stop" Goodbye London hello Dublin with it's passporting rights for E.U entities!

 

 

 

 

Or maybe this: 

 

 

 

Britain has placed it's self in a unique position. Standing outside of the European Union but with full control over their interest rates. Britain's salvation is a  currency depreciation. We always had the freedom of Central Bank sovereignty since surviving the drop out of the European Exchange Rate mechanism back in 1992. But now it's importance is even more pronounced.

 

Going forward Britain needs to look to it's past to navigate it's future. That past is it's Colonial history. 

 

 

We see this period as an opportunity in the areas that we seek to enter.  We estimate that the Commonwealth countries will come into prominence over the next few years as the UK seeks to expand it's trading relations through reconnecting with our old Colonial cousins. However much has changed since Harold MacMillian's  "Winds of Change" Speech and the wave of independence during the 1960's ( only 15 years after the end of the Second World War and a few years prior to full entry to the European Economic Community of Edward Heaths Government).  We now face a NEW wind of Change here in Britain our own Political and Economic Independence. 

 

While much has changed since the 1960's significantly the end of the Cold War and the Wests obsession with whether former Colonies would go down the Vietnam route of Communism or Capitalism.  Paradoxically,  China is the new boy on the Block. In Africa China has made spectacular in roads and have been welcomed with open arms, trade and aid without the moral strings attached. And France with it's CFA ( Currency Zone in West Africa) never really let of of it's Colonial past. Britain has acted in an introverted fashion and imposed a walk of shame and guilt when looking at its past. 

 

 

 

Britain has been particularly quiet over the Protests that were held in Hong Kong for fear of waking the Sleeping Tiger. 

 

However, we see opportunity. Through forging links with Frontier markets that use English as the Lingua Franca , have similar legal systems and strong ties with the UK, Britain should be able to steer a path to prosperity in areas that have for long been destined for substantial growth in GDP. 

 

Likewise it is the smaller businesses that are more nibble and less reliant on cross border trade than the multi-nationals. Small Businesses and companies will be the one's pulling on the tow rope of the U.K economy dragging Britain out of the next recession. Despite the risks it makes sense to invest in the Private Equity of the smaller company. 

 

 

 

 

Recognising the impact that Brexit has caused on the economy we as a mino look to make substantial returns in areas that the mainstream Fund Managers overlook. 

 

Prince Peter

Studied Contemporary European Studies at 

University of North London 

Dissertation : "Lobbying and the European Decision Making Process"

 

 

 

 

 

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