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

House prices: from boom to even bigger boom
House prices

House prices: from boom to even bigger boom

UK house prices have risen to new to record highs, says Nicole Garcia Merida. Demand continues to outpace supply, but continued low interest rates, th…
9 Apr 2021
1 April 1999: The minimum wage is introduced in Britain
This day in history

1 April 1999: The minimum wage is introduced in Britain

On this day in 1999, the national minimum wage was introduced in Britain, bringing an instant pay rise to 1.9 million low-paid workers.
1 Apr 2021
How the vaccine wars will harm us all
Global Economy

How the vaccine wars will harm us all

Grabbing and hoarding vaccine supplies, or even manufacturing one’s own, might seem to make sense for a state in an emergency. But the damage done to …
27 Mar 2021
House price rise slows – but not by much
House prices

House price rise slows – but not by much

The rate of increase in UK house prices slowed in the year to January. But nothing seems able to halt their determined march higher, says Nicole Garci…
26 Mar 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
House prices: from boom to even bigger boom
House prices

House prices: from boom to even bigger boom

UK house prices have risen to new to record highs, says Nicole Garcia Merida. Demand continues to outpace supply, but continued low interest rates, th…
9 Apr 2021