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

Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
A beginner’s guide to inflation – everything you need to know
Inflation

A beginner’s guide to inflation – everything you need to know

One of the most frequently mentioned topics in the news these days is inflation. But what exactly is inflation and how does it affect the economy and …
18 Jan 2021
Why the City should create a single financial market with the Swiss
Economy

Why the City should create a single financial market with the Swiss

A tie-up between London and Zurich, two global financial centres, could pay huge dividends for both, says Matthew Lynn.
17 Jan 2021

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Prepare for the end of the epic bubble in US stocks
US stockmarkets

Prepare for the end of the epic bubble in US stocks

US stocks are as expensive as they’ve ever been. How can you prepare your portfolio for a bubble bursting?
18 Jan 2021
The best investment trusts to buy for 2021
Investment trusts

The best investment trusts to buy for 2021

Sectors ranging from emerging markets to student accommodation look poised to do well this year, says David Stevenson, as he picks the best investment…
19 Jan 2021