{"id":9694,"date":"2021-07-12T14:59:32","date_gmt":"2021-07-12T14:59:32","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=9694"},"modified":"2022-02-26T13:05:52","modified_gmt":"2022-02-26T13:05:52","slug":"how-has-brexit-impacted-the-u-k-economy","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/how-has-brexit-impacted-the-u-k-economy\/","title":{"rendered":"How Has Brexit Impacted the U.K. Economy?"},"content":{"rendered":"\n<p>Britain voted to leave the European Union (EU) in the famed\nBrexit vote on June 23, 2016. That means it\u2019s been just over five years since\nvoters decided to end 47 years of U.K. membership in the EU. This was a huge\ndecision, with far-reaching economic and investment implications that are still\nbeing processed.<sup>1<\/sup><\/p>\n\n\n\n<p>At Zacks Investment Management, our research looks at trends\nnot only in the U.S., but also across the global economy. We live in an\nincreasingly globalized world \u2013 more than 50% of all reported foreign\ntaxable income (for all companies, globally) is earned in Europe and Asia. In\n2019, S&amp;P 500 companies derived almost 30% of their revenues from outside\nthe U.S. Investors may not realize it, but by owning large cap U.S. stocks, you\nare actually gaining international exposure.<sup>2<\/sup> <\/p>\n\n\n\n<p>Today and going forward, understanding\nwhere multinationals derive revenue \u2013 and understanding the macroeconomic\npictures in those regions and countries \u2013 are key components of thorough\nearnings analysis. <\/p>\n\n\n\n<p>____________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2021_07_05&amp;content=stock_market_outlook_report   \">Don\u2019t Fall Into the Trap of Timing the Market! <\/a><\/strong><\/p>\n\n\n\n<p>Observing, not only the financial trends in the U.S., but in\nthe global economy is key to investing. The proper research can better navigate\nyou through concerns or uncertainties surrounding the market. <\/p>\n\n\n\n<p>That\u2019s why during this time of economic recovery, investors\nmust stick to the facts and hard data. Don\u2019t try to time the market and give in\nto fear and emotions!\nInstead, we recommend keeping your focus on the long-term by looking into key\neconomic indicators that can make a positive impact on your financial success.<\/p>\n\n\n\n<p>To help\nyou do this, I am offering all readers our just-released Stock Market Outlook\nreport. This report contains some of our key forecasts to consider such as: <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Zacks\nrank S&amp;P 500 sector picks<\/em><\/li><li><em>Zacks\nview on equity markets<\/em><\/li><li><em>What\nproduces 2021 optimism?<\/em><\/li><li><em>Zacks\nforecasts for the remainder of the year<\/em><\/li><li><em>Top\nstocks in top industries<\/em><\/li><li><em>Sell-side\nand buy-side consensus<\/em><\/li><li><em>And\nmuch more<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0<br> <strong><br>IT\u2019S FREE.\u00a0<a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2021_07_05&amp;content=stock_market_outlook_report   \">Download the Just-Released July 2021 Stock Market Outlook<\/a><sup>3<\/sup><\/strong><\/p>\n\n\n\n<p>____________________________________________________________________________<\/p>\n\n\n\n<p>That\u2019s what makes the U.K., which was the 6<sup>th<\/sup>\nlargest economy in the world in 2020, so important. It also makes it worth\nanalyzing the Brexit decision closely, to understand how the U.K. has performed\nsince the decision \u2013 and what the future may hold. <\/p>\n\n\n\n<p>So far, it has not been so good. Here are a few key data\npoints worth noting:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>In the five years from June 23, 2016, to June 23, 2021, the MSCI All-Country World Index rose +80.65%, the S&amp;P 500 Index is up +103.96%, but the MSCI UK Index is only up 8.13% (price returns). The underperformance here is quite significant;<\/li><li>Britain\u2019s international trade has declined 14% since 2018, while total world trade declined a lesser 8% over the same period;<\/li><li>Out of 10 major global currencies tracked since the Brexit referendum on June 23, 2016, the pound sterling (GBP) has weakened the most;<\/li><li>Business investment in Britain stalled in the years following the vote, and took a big hit during the pandemic;<\/li><li>London has been slowly losing its status as the financial capital of Europe, with banks continuing to shift employees to other European cities;<\/li><li>And, most recently, Britain has been facing labor shortages similar to what we are seeing here in the U.S., without the ability of EU workers to enter the country and fill jobs. <\/li><\/ul>\n\n\n\n<p>Brexit has not been an unmitigated disaster for the U.K.,\nbut it has certainly not been a triumph, either. The upshot is that the U.K. may\nimplement some pro-growth policies going forward, which could reopen an\ninvestment thesis for British stocks. <\/p>\n\n\n\n<p>The government is currently planning a \u201csuper deduction\u201d tax\nbreak, which will allow businesses to deduct 130% of new equipment and plant\nspending. If a business buys a $100,000 machine in 2021, it can deduct $130,000\nfrom revenue when filing taxes in 2022. This tax break could spur new\ninvestment. <\/p>\n\n\n\n<p>Financial services make up 7% of Britain\u2019s economy, and 40%\nof its financial services exports go to the EU. But Brexit has muddied London\u2019s\nstanding as the financial hub of Europe, with cities like Amsterdam, Frankfurt,\nand Paris vying to take its place. On the working first day of 2021, trading in\nEuropean shares showed a marked shift from venues in London to venues on the\nEuropean continent. Many expect the trend to continue. <\/p>\n\n\n\n<p>Once again, the government is attempting a pro-business\nresponse, by overhauling rulings on listings and loosening regulations. Part of\nthis effort involves allowing SPACs into the markets and setting up a fast-track\nvisa process for fintech workers who want to move to Britain. Fintech is\nanother area where regulators are being asked to step back to let start-ups\nexperiment.<\/p>\n\n\n\n<p><strong>Bottom Line for\nInvestors <\/strong><\/p>\n\n\n\n<p>The five years since Brexit have been largely rough going\nfor the U.K. economy and equity markets. Stock market returns have been muted,\ngrowth has been uninspiring, trade has fallen, and business investment has\nstalled. There have not been many reasons to be excited about investing there. <\/p>\n\n\n\n<p>The picture could look different going forward, however, as\nthe government seeks to goose the economy with lower taxes, less regulation,\nand other incentives like fast-tracked visas for tech workers. All developed\neconomies are likely to see a strong bounce back in the months and quarters\nfollowing the worst of the pandemic. The question for the U.K. and global\ninvestors, however, is whether Britain can return to its pre-Brexit might. &nbsp;<\/p>\n\n\n\n<p>This is\nwhy we recommend that investors keep a diversified approach. We also encourage you\nto focus on the data points that can impact your long-term investments! To help\nyou do this, I am offering all readers our just-released Stock Market Outlook\nreport. This report contains some of our key forecasts to consider such as: <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Zacks\nrank S&amp;P 500 sector picks<\/em><\/li><li><em>Zacks\nview on equity markets<\/em><\/li><li><em>What\nproduces 2021 optimism?<\/em><\/li><li><em>Zacks\nforecasts for the remainder of the year<\/em><\/li><li><em>Top\nstocks in top industries<\/em><\/li><li><em>Sell-side\nand buy-side consensus<\/em><\/li><li><em>And\nmuch more<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!&nbsp;<br><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Five years after the Brexit vote, the U.K. economy is tepid, but new government policies could spur new growth <\/p>\n","protected":false},"author":3,"featured_media":8874,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-9694","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9694","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=9694"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9694\/revisions"}],"predecessor-version":[{"id":10363,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9694\/revisions\/10363"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9694"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9694"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9694"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}