The Weekly Brief
Global Market Insights Strategy Team
The economic outlook for the UK has been muddied by ongoing Brexit uncertainty.
It does appear that the risk of an imminent no-deal exit has subsided, but uncertainty is likely to persist. If the election delivers a majority for Boris Johnson’s withdrawal agreement, then a future trade deal still needs to be negotiated. Alternatively, a referendum might lead to a softer Brexit or potentially even no Brexit at all, but the result would not be known for quite some time after the election. So while the election could provide some clarity on the potential paths ahead, a clear Brexit resolution will not be known anytime soon. Since the referendum, UK equities have become significantly cheaper than other markets. This discount is unlikely to completely narrow while the political uncertainty remains beyond the election, but does at least suggest a fair amount of bad news is already in the price.
UK equities are cheap relative to global equities
Gap between FTSE 100 and MSCI World P/E ratios, x multiple