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UK Investment Markets: Weekly Update – March 11th 2019

This is crunch week for the government, as Theresa May’s Brexit deal returns to parliament. If it is rejected again, lawmakers will vote on whether to leave the EU without an agreement on March 29 or ask the EU for a delay. Meanwhile, May has consistently warned that rejecting her deal again would create a “moment of crisis”.

British MPs will vote again on Tuesday, making the historic decision whether to back her plan or risk a chaotic exit from the EU in less than three weeks’ time. Two months ago, the House of Commons rejected the withdrawal agreement by a huge majority, and sent May back to renegotiate.

EU leaders have rejected her demands, however, and talks between British and EU officials have failed to secure a breakthrough. In the very likely event that there is a failure to approve a deal and if no extension is negotiated, Britain would have to leave the EU after 46 years of membership on March 29, causing huge disruption on both sides.

Few MPs expect any major concessions before Tuesday’s vote, and the prime minister instead has repeatedly reminded them of the stakes involved if her deal is rejected.

May Continues to Emotionally Blackmail the Nation

In her speech on Friday, she warned: “Back it and the UK will leave the European Union. Reject it and no one knows what will happen. We may not leave the EU for many months. We may leave without the protections that the deal provides. We may never leave at all.

A threatened cabinet revolt over the risks of a no-deal Brexit forced May to agree that, if her deal is defeated again, MPs will be able to vote between a “no deal” option and a delay to Brexit this week.

Speaking in Grimsby, a North Sea fishing port that voted to leave the EU in the 2016 referendum, May asked Brussels for “one more push” to get an agreement. “The decisions that the European Union makes over the next few days will have a big impact on the outcome of the vote,” she said.

Their talks are focused on the so-called backstop, an arrangement in the Brexit deal intended to keep open the Irish border. It would keep Britain in the EU’s customs union and parts of its single market until and unless another way – such as a trade deal – is found to avoid frontier checks.

Many MPs fear a trap to keep them tied to EU rules, but Brussels has rejected calls for a time limit or unilateral way out of the arrangement. EU chief negotiator Michel Barnier repeated on Friday that the bloc could offer a legally binding statement confirming the backstop was only meant to be temporary. Speaking to reporters after May’s speech, he added: “We are not interested in the blame game; we are interested in the result.”

Labour Backs Second Referendum under Pressure from Party

The Labour party still opposes the deal, even while May has been wooing individual MPs with promises of protection for workers’ rights and new funds for poor towns. If the deal is rejected on Tuesday, MPs are expected to vote against a “no deal” exit on Wednesday, paving the way for a vote on delaying Brexit on Thursday. Senior Labour MP Emily Thornberry told The Times on Saturday that her party would back a short delay to Brexit, but not beyond July. However, she rejected speculation that Labour would back a plan to agree to May’s deal on the condition of holding a public vote.

Key dates in what could be a momentous week:

Monday, March 11

May could go to Brussels to finalise any changes she has secured to the Brexit deal relating to the so-called Irish backstop. The EU has refused to reopen the text but is offering further guarantees about the operation of the backstop, an arrangement to keep open Britain’s border with Ireland. The deadline is Monday night when May must put down a motion in the House of Commons to allow MPs to vote on the deal on Tuesday.

Tuesday, March 12

The House of Commons votes again on May’s deal, just over two months after rejecting it on January 15 by 432 votes to 202. May will open the debate, from around 12:45pm and votes are expected from 7pm.

Wednesday, March 13

If the deal is rejected, MPs will vote on whether Britain should leave the European Union on March 29 without any deal at all.

Thursday, March 14

If MPs reject a “no deal” exit, they will vote on whether to seek from the European Union a “short, limited” delay to Brexit. May has mentioned the possibility of a three-month extension, ending before the new European Parliament meets for the first time in early July.

Thursday, March 21

EU leaders, including May, gather for their final summit in Brussels before Britain’s scheduled departure.

Friday, March 29

Britain leaves the European Union, unless the process is formally delayed – or revoked, an option nobody is discussing.

CHOOSING THE SAFEST OPTIONS FOR YOUR INVESTMENTS AND SAVINGS

There is still no likelihood of any stability in the near future neither in the UK or the EU. With the focus on the UK, it is easy to ignore the mess that the EU is in economically and how the sudden withdrawal of Britain’s investment will impact it even more. From an investor’s point of view, it’s almost too risky looking for opportunities anywhere at the current time.

However, that can sometimes be a very narrow view to take as there are always anomalies when there’s economic uncertainty. In fact, when there’s market volatility, more millionaires are created than at other times in economic cycles. That said, it is definitely not a time to be greedy in terms of expecting high returns without any risk exposure. These opportunities seem to exist everywhere but they are absolutely worth avoiding, particularly if you are investing for a particular milestone such as buying a home, funding university or retirement.

At Investor Live, we are always looking for the kind of anomalies that represent safe and sound investments when there’s any kind of instability. From my point of view, it is important that the opportunity to cherry-pick exciting investments with a low-risk profile is not restricted only to those with bulging bank accounts. I represent the “normal” investor and on that basis, any recommendations I make are purely based on independent judgement.

Fixed income opportunities that are backed by tangible assets are the safest possible option for your investment strategy at the current time. You want to be sure you’ll be receiving a determined amount back for your investment and that there’s something underpinning it of significant value. One of the things to consider is not how much the asset you’re invested in is worth but how much of it is owned by the issuer behind the investment opportunity.

Investment over the short-term is always a better idea when markets are volatile and there are a few opportunities to enter the British hotel and hospitality sector for 1- to 2-year terms. One such opportunity comes from Liverpool-based hotelier Signature Living which has a proprietary investment vehicle called a Secured Partnership Investment (SPI). You can find out more about how to invest in this award-winning hotel brand that is rapidly expanding its portfolio of heritage hotels by contacting Investor Live.

About the Author

Amanda Wright is a former risk analyst at Bankers Trust, with specific experience of mergers & acquisitions and corporate finance. As a contributor to Investor Live, Amanda provides valuable insights into the technicalities of fundamental analysis in a way that is easy to understand, to provide retail investors with the tools to make considered investment choices.