Pensions - Articles - Brexit for pension schemes


Rob Price, Fixed Income Portfolio Manager at AXA Investment Managers comments on Brexit day and pensions

 “The shadow of Brexit will fall again later in the year, but for now UK credit spreads offer a favourable window of opportunity.

 UK credit spreads in favourable environment in first half of the year as the near term runway appears clear for risk while uncertainty may increase as we approach the end of the Brexit transition period, at which point we expect the uncertainty around the future UK-Europe relationship to weigh on business investment.

 Risks may resurface towards the second half of the year if an FTA does not appear likely, even in a skeleton form, bringing back the spectre of a ‘Hard Brexit’ outcome in Jan 2021. In that case a degree of spread widening is almost certain, partly driven mechanically by the decline in Gilt yields.
 
 Ultimately, further accommodation by the BoE and ongoing high demand for sterling fixed income products from cashflow focused schemes, should cap if not reverse such a spread widening.”

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