Editor's letter

Reasons to be cheerful about Britain's economy

For all the noise about Brexit, Britain's economy is very resilient, with good GDP growth; unemployment at its lowest for 44 years; and retail sales up more than 5% year-on-year.

949_MW_P03_Ed-Letter

UK economy: more reasons to be cheerful than expected

Given the way it is disrupting our politics, you would think that Brexit is just about the only thing that matters to the UK. Not so.

In this week's magazine, Matthew Lynn looks at some of the other (rather more important) things that the brave (or perhaps foolish) person who becomes the next prime minister needs to concentrate on. As far as he is concerned, our trading relationship with Europe comes pretty low down the list.

John Stepek agrees that Brexit doesn't much matter. Note that for all the sound and fury, the UK is still seeing rather better GDP growth than most of the other EU countries. At the same time, unemployment is at its lowest for 44 years (3.8%) and retail sales are up more than 5% year-on-year. This is a very resilient economy.

The biggest threat from Brexit

What can you do? John has a good look at the options available in this week's cover story. We would not, however, recommend abandoning the UK stockmarket as a whole. Far from it. Good value high-quality stocks are hard to find these days, but the UK is jammed with them Troy's Hugo Ure suggests a few in this week's magazine. The pound is also very cheap discounting pretty much every risk out there. If Brexit goes better from here, and the Corbyn threat retreats, it will be become clear, as Hamish McRae puts it in the Daily Mail, that "on a long view UK assets must be bargain basement".

If you are a less value-oriented investor you might turn to my interview with Walter Price. Price is a huge believer in the US technology sector. We might carp about the valuations of the likes of Uber, Lyft and Tesla (now increasingly being seen as a heavily-indebted car company with production issues, rather than a super-duper tech firm), but he reckons that if we look among the mid-caps and concentrate on the less whizzy-sounding areas of technology that are gradually transforming corporate behaviour (and costs), as well as our day-to-day lives, there is huge value in the technology sector.

Most investors think this round of the great tech boom is coming to an end. Price thinks it is just beginning and that we should all be heavily invested for the next 20 years. The growth will, he says, more than justify today's prices (the average price/earnings ratio in his portfolio is a lot more than 30 times).

Finally, if that's not punchy enough for you, we look at Facebook's cryptocurrency launch. Is it time that us old-timers at MoneyWeek gave in and accepted that crypto is the future? For the answer to that (hint: John and I aren't quite there yet) listen to our latest podcast.

Recommended

Green finance is set to be the most powerful financial repression tool yet
Bonds

Green finance is set to be the most powerful financial repression tool yet

The government has launched its “green savings bond” that offers investors just 0.65%. But that pitiful return is in many ways the point of “green” fi…
22 Oct 2021
Equities are not a good inflation hedge
Economy

Equities are not a good inflation hedge

Institutional investors are definitely now worried about inflation. But they're not yet worried enough to flee to cash, says John Stepek
22 Oct 2021
Why fed-up workers are quitting their jobs
Economy

Why fed-up workers are quitting their jobs

Workers are leaving their jobs at an astonishing rate, especially in the US, leading to a shortage of workers. What will that mean for our economies? …
22 Oct 2021
China’s economy faces a triple shock
Chinese economy

China’s economy faces a triple shock

Power cuts, the pandemic and the property slowdown are slowing China's economy down.
22 Oct 2021

Most Popular

How to invest as we move to a hydrogen economy
Energy

How to invest as we move to a hydrogen economy

The government has started to roll out its plans for switching us over from fossil fuels to hydrogen and renewable energy. Should investors buy in? St…
8 Oct 2021
How to invest in SMRs – the future of green energy
Energy

How to invest in SMRs – the future of green energy

The UK’s electricity supply needs to be more robust for days when the wind doesn’t blow. We need nuclear power, says Dominic Frisby. And the future of…
6 Oct 2021
The after effects of the gas-price shock
Economy

The after effects of the gas-price shock

In the wake of the recent spike in the natural gas price, we can expect slower growth, an industrial recession – and a newly assertive Russia, says Ma…
17 Oct 2021