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 Brexit and Corbyn: What should an investor from the UK do?

Brexit and Corbyn: What should an investor from the UK do?

A hard Brexit or a sharp fall in the value of sterling?

Winston Churchill once said of the British that they are a unique nation as “they are the only people who like to be told how bad things are.” The view of many experts these days is that it is difficult to accurately convey how much worse the financial situation could get for the UK in the coming years.

Firstly, after voting to leave the European Union in a referendum in 2016, the country could be heading for a “hard Brexit” – leaving the EU without a negotiated post-departure deal in place. Secondly, the next election may be won by the Labour Party and the country could plunge into a major economic crisis, which some have suggested could lead to the imposition of capital controls. For UK citizens living in Israel these developments clearly demand a review of existing financial plans.

The most important issue to address is that either a hard Brexit or a Labour government could trigger a sharp fall in the value of sterling. For those who remember when the pound traded at above 8.5 to the shekel and have watched it slide to 4.8, this is a worrying possibility. Here are a few actions you may want to consider while planning ahead.

One of the basic principles of financial planning is the importance of matching assets to liabilities.

Evidently, fixed pensions in sterling cannot be protected, but it is important to review other existing and potential forms of income – such as pension or Drawdown plans – to see if it is possible to generate a shekel income that would not be affected by a plummeting pound.

Additionally, investments should be reviewed and perhaps be reallocated to stronger currencies such as the US dollar, be converted to shekel- based assets or a combination.

Similarly, if you are holding individual shares in British companies, perhaps this should be changed in favor of a more global approach.

With it being evident that a Labour government would raise taxes to meet its considerable spending plans, it is also crucial to ensure you aren’t affected by this.

Finally, money left in UK bank accounts perhaps should also be moved outside of the UK to remain accessible in the event of capital controls.

It is possible that Britain will reach a deal with the EU that will lead to a smooth transition to a post-Brexit world. With a general election not necessary until 2022, a hard-left Labour government is also not assured. Notwithstanding this, it would definitely be a sensible strategy to review these potential risks and consider how to mitigate them so you don’t lose money.

 The aforementioned information is not a substitute for personal Investment marketing, which takes into account the particular circumstances and special needs of each person. The views expressed in this article should be considered as market comment for the short term for information purposes only. As such the views herein may be subject to frequent change, are indicative only and no reliance should be placed thereon. This article does not constitute legal, tax or accounting advice, or any investment recommendation, or any offer to buy or sell financial instruments of any kind, and does not take into account the investment objectives or needs of specific investors. Although this article has been produced with all reasonable care, based on sources believed to be reliable, reflecting opinions at the time of its writing and subject to change at any time without prior notice, neither Pioneer Wealth Management nor any other entity or segment within the Pioneer International Group makes any representations or warranties as to the accuracy or completeness hereof and accepts no liability for any loss or damage which may arise from its use. The writer and the company are unaware of any conflict of interest at the time of publishing the above commentary.

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About the Author

Andrew Album

Andrew Album

Senior Wealth Manager

Since 1993 Andrew Album has been advising families in the UK on investment strategies, retirement planning and estate tax mitigation.

Andrew qualified as Chartered Accountant at Price Waterhouse, working for the firm in both Melbourne and London. From 2010 he has been servicing clients as a Senior Partner at St James's Place in the UK.

Andrew made aliyah to Israel in 2007 and his focus at Pioneer is with clients who have made aliyah, those planning retirement in Israel and families with members in both the UK and Israel. 

Andrew holds a BA in Economics from Manchester University, England, is a Chartered Accountant, a qualified financial adviser in the UK, and a a Financial Planner licensed by the Israel Securities Authority.  

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