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The EU Referendum and your investments

13th May 2016

On 22nd June 2016 the British Electorate will decide whether or not the United Kingdom leaves the European Union. The most recent opinion polls are fairly evenly divided and this has given rise to uncertainty in the investment market in this country.
The view of this firm is that it is in the best interests of investment clients for this country to remain in the EU.  A positive vote could see the UK market rise at least in the short term, before possibly settling back.

Conversely, if the United Kingdom votes to leave the EU, it is possible that our investment market will fall, at least in the short term, until the uncertainty of how the exit is to be implemented is clarified.  There is a two year period of notice provided by the EU Treaty but it may take considerably longer than this to unravel the various institutions. In the longer term, the importance of London as a world financial centre is likely to remain, but in the short term it may be very different.

Whilst it is clear that the valuations in shares could fall on a vote to leave the EU, this is not the case with low risk investments such as cash deposits. For some, therefore, it could be prudent to increase investment in low risk products, especially if the time horizon for investment is a shorter one. However, investors who are in for the longer term may have less cause for concern.

It is somewhat disappointing that the EU Referendum has come as early as this because the economic background, especially outside the UK, remains difficult. If the referendum had been deferred until the last possible date – 2017 – there might have been more time for additional negotiations on an improved deal from Europe.

The electorate, of course, will vote according to the economic arguments and their own personal views but, interestingly, a large percentage of voters still remain undecided. We have all heard views from such eminent sources as the Governor of the Bank of England, the International Monetary Fund and Barack Obama! Voters should now take careful note of the detailed arguments and ponder how leaving the EU or staying put might affect them.

If you need advice about your investments and more information about how they could be affected if we leave the EU, speak to your investment advisor.

John Atkinson. Chartered Wealth Manager. Investment department.

Business, George Ide, Investment, News
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