A ‘no-deal’ Brexit is widely considered an undesirable outcome, albeit may be considered the best of a bad bunch depending on the path of negotiations over the coming months.
Simeon Willis, Chief Investment Officer, XPS Pensions looks at what a no-deal scenario could look like in terms of the wider economy, pension scheme finances and the investment industry, and what, if anything, pension scheme investors can do to prepare for this eventuality.
Effect on the UK and global economy
A no-deal outcome has significant implications for the UK and European economy as a whole. It is easy to imagine how a loss of clarity over tariffs and regulatory structure could push the economy into turmoil. Many parts of our economy exist on finely honed ‘just in time’ processes, from car assembly to food and medical supply delivery, and even a short delay can compound to create havoc. Any detriment would not be limited to direct impacts of a supply chain, as there are also many secondary and tertiary effects which could be felt hard in our integrated society.
You only need to look at the knock-on effects that the shortage of CO2 created in June this year, from beer drinkers and food packing through to abattoirs, to appreciate the scale of the potential cost. After all CO2
is a supply chain issue that many of us didn’t even know we didn’t know about.
Decision makers are conscious of these concerns but the scope for unintended consequences is huge, and the possibility of some key issues falling through the cracks is considerable. Therefore we are not complacent. To read more of Simeon’s comments on a potential ‘no-deal’ and the steps that can be taken to protect a pension scheme please click the full briefing XPS Investment No Deal Brexit
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