Article 50 is here – keep calm and carry on investing

Lots of different things affect the way you should invest, says Merryn Somerset Webb. The invocation of Article 50 isn’t one of them.

When the UK voted for Brexit in June last year, a lot of people (some MoneyWeek staff included) were very upset. Some of them were so upset that before the day was out they had downloaded an application for an Irish passport to make certain that they would be able to remain citizens of the European Union even as the nation crashed out. The Irish foreign minister had to remind everyone that it would be at least two years before the UK left the EU and that it only takes six weeks to get an Irish passport.

I wonder how many still feel the sense of panic they felt on 24 June. Since the vote there has been no economic disaster. The fall in the pound has been partially responsible for giving the Bank of England the inflation it has been desperate for since 2009. There are signs that the UK economy is finally beginning to rebalance slightly. The stockmarket has not suffered. Far from it. The FTSE 100 is up 17%, the FTSE 250 is up 11.3% and the domestically focused FTSE Small Cap index is up 19%. UK equities might now be more dear than we'd like, but no more so than anything else.

Finally, negotiations have got off to a perfectly good start. Theresa May's letter was firm, but co-operative in tone. She asks that we hang on to our special partnership and that we work out a "bold and ambitious" free-trade agreement something which presumably the likes of Germany want (the UK is the second largest importer of German goods by value). And the EU already seems to have met the UK part way on the timetable by conceding that should "substantial progress" be made on the exit deal, it is possible to talk about transitional arrangements at the same time. So what next?

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Here's my guess. Over the next two years there will be periods of trying stalemate and administration followed by odd moments of activity and breakthrough. Assuming there's no crisis in the EU that interrupts negotiations (far from a given), in two years there will be a compromise deal which gives more or less free trade and more or less freedom of movement. Our civil servants will be exhausted. The rest of us will be bored. The real results of changing our trading arrangements with the EU (which I think will be very positive) won't be visible for a decade.

What should you do about it? Nothing. Lots of different things affect the way you should invest. The invocation of Article 50 isn't one of them. Still, if you are worried about not being a full part of the EU any more and your Irish passport application has failed, you might turn to our cover story this week there we explain how you can stay in the UK, but be an EU citizen as well. The truth is, as I bet Theresa May knows, that if you are happy to do a little administration and to hand over a medium-sized pile of cash, you can have your cake and eat it.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.