60 seconds on the UK election implications for the economy and Brexit
Growth could slow and Brexit talks remain the big uncertainty.
9 June 2017
Surprise result implies weaker government
There was a big shock from the result of the latest general election in the UK.
A hung parliament means we are going to have a much weaker government in power going forward. It will be much more difficult to pass legislation and change budgetary rules, etc.
This means households and corporates may decide to hold back a little on spending and be a little bit more cautious due to that uncertainty.
Sterling dip is inflationary
Now, the immediate impact that we’ve seen for the pound is not as significant as that of the Brexit referendum but it is still there.
At the margin, we’re going to see a little bit more inflation and probably slightly weaker growth going into the next year.
The Bank of England is unlikely to change policy at this stage but I’m sure they’re willing to step in if financial conditions worsen.
Brexit is the main uncertainty
The big question is really about Brexit; will Europe still be reasonable with the UK given the much weaker position the UK is now in?
It’s impossible to say at this stage but we will keep monitoring it and, of course, keep you up to date.
Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.