Corbyn’s second Brexit referendum shift could spook markets

News


28 May, 2019

Corbyn’s second Brexit referendum shift could spook markets
 
A positive impact of a second Brexit referendum on financial markets would be offset by a win by Jeremy Corbyn’s Labour party, warns the CEO of one of the world’s largest independent financial advisory organisations.
 
The warning by Nigel Green, chief executive of deVere Group, which has $12bn under advisement, comes as Mr Corbyn has vowed to back a second referendum on any Brexit deal following his party’s disastrous EU election result.
 
Mr Green affirms: “The uncertainty surrounding Brexit is having a real impact on business in the UK, the EU, and those around the world that trade internationally.
 
“This uncertainty has created a tangible lack of confidence, resulting in falling investment, spending and recruiting across Britain.
 
“Following MPs’ abject failure to so far find a way forward through the impasse, the next move has to be to have a second Brexit referendum in order to protect jobs and secure long-term, sustainable economic growth.”
 
He continues: “A second referendum would likely be welcomed by financial markets for two reasons.
 
“First, it gives MPs a clear, unequivocal message either way, breaks the grinding deadlock, and reduces ongoing uncertainty.
 
“And second, it would increase the chances of a softer Brexit, which would have the effect of producing a relief rally in Sterling, UK financial assets, and also a spurt in economic activity in Britain, as delayed household and business spending is unleashed.”
 
Mr Green goes on to add: “A confirmatory vote of this kind will likely prove to be an appealing option for much of the electorate in the UK.
 
“Therefore, Mr Corbyn’s new approach will in the eyes of many voters make his Labour party more electable in a general election than it has been in a long while.  And this prospect could spook financial markets.
 
“As such, any positive impact of a second Brexit referendum on financial markets would be offset by a win by Jeremy Corbyn’s Labour party.”
 
Earlier this month, the deVere boss noted: “Since the beginning of the year a large and growing number of clients are telling our advisers that for their wealth they fear the damaging impact of a Jeremy Corbyn-led government more than Brexit.
 
“High-net-worth individuals in Britain and wealthy international investors with UK assets and business know that they will be hit by Mr Corbyn’s tax hikes on wealth, income and inheritance.
 
“As such, more and more of them are seeking advice on established, legitimate overseas opportunities to create, build, and importantly, protect their wealth.”
 
He concludes: “If it had been the government and not Mr Corbyn who shifted stance on a second referendum, the markets could have been expected to react far more favourably.”