020 7189 9999
Opening hours
Mon - Fri: 7.45am to 6pm (Thurs 8pm)
Sat: 9.30am - 1.30pm
Request a call back
  • Home
  • News
  • Osborne switches gear back into Chancellor mode

Osborne switches gear back into Chancellor mode

This morning George Osborne, Chancellor of the Exchequer, issued a statement seeking to reassure the financial markets after the country voted to leave the EU last Thursday.


This end to his silence follows a weekend of high political drama domestically, in which the race to find a replacement leader for the Conservative Party began. Jeremy Corbyn’s Labour shadow cabinet imploded, while a breakup of the UK entered the realm of possibility as the SNP’s Nicola Sturgeon sought both a second referendum on Scottish independence and a block on EU withdrawal entirely. Mixed messages emerged from European officials and politicians over engagement with the UK, ranging from outright hostility (Jean Claude Juncker) to constructive (Angela Merkel).

Osborne reassures

Against this backdrop, George Osborne’s statement marks a significant and necessary shift from the ‘end is nigh’ tone he used during the campaign (which suggested a decision to leave would wreck the economy and an emergency Budget would be required, with tax hikes, spending cuts and likely higher interest rates) to a much more measured stance.

Today Osborne stated that the economy “is about as strong as it could be to confront the challenge our country faces” and that there is no need to act hastily in terms of any measures that might be required with respect to the public finances. In essence this was confirmation that a so-called ‘punishment Budget’ in the near term is off the cards. If anything, letting the dust settle on the immediate shock could conclude that pro-growth measures such as cuts in corporation tax might be an appropriate way to signal to businesses globally that the UK remains a very attractive place to do business.

The Bank of England has already made clear that it is willing to provide whatever liquidity is necessary, and expectations of a rate cut are increasingly growing. A possible further round of quantitative easing can’t be ruled out either.

Keep a cool head amid uncertainty

There is no doubt that these are unnerving times and we are now in for a prolonged period of political and economic uncertainty, with periods of market volatility likely. After all there are other big issues looming over global markets, including concerns about China’s credit bubble and slowdown, weak global growth and the limits of monetary policy.

But we think it’s time for investors to keep a cool head, focus on the long term and retain a bias to funds that concentrate on liquid, high-quality companies with strong and visible cashflow generation and international earnings. While some sectors such as financials and property are going to be impacted by ongoing uncertainty as the UK’s future relationship with the EU is fleshed out, throughout the referendum debate we have consistently pointed out that over 70% of FTSE 100 earnings are made outside the UK, providing some cushion to any near-term weakness in UK growth. As these typically dollar-based earnings are repatriated in sterling profits and dividends, the weaker pound should actually provide a boost.

If you would like to speak to us about your investments please call us on 020 7189 2400. Alternatively email us at best@bestinvest.co.uk or request a call back and we will be in touch.

The value of your investment can go down as well as up, and you can get back less than you originally invested.

The Bestinvest Online Investment Service, including any account analysis and investment reports provided by our guidance services, is an online execution-only dealing service for investors who want to make their own investment decisions. It does not provide advice on the suitability of products and investments; if you are unsure about the suitability of any investment you should seek professional advice. Clients of our Investment Advisory Service and Managed Portfolio Service can use the website to obtain current valuations of their investments but cannot trade on these accounts online and should call their adviser if they wish to discuss changes to their investments.

Past performance or any yields quoted should not be considered reliable indicators of future returns. Restricted advice can be provided as part of other services offered by Bestinvest, upon request and on a fee basis. Before investing in funds please check the specific risk factors on the key features document or refer to our risk warning notice as some funds can be high risk or complex; they may also have risks relating to the geographical area, industry sector and/or underlying assets in which they invest. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.

Issued by Bestinvest (Brokers) Limited (Reg. No. 2830297), which is authorised and regulated by the Financial Conduct Authority. Financial services are provided by Bestinvest (Brokers) Limited and other companies in the Tilney Bestinvest Group, further details of which are available here. This site is for UK investors only.
© Tilney Bestinvest Group Ltd 2016.

Version: RC1026.42402