Article by Mark Newman
Downing Street is confirming the rumours that began circulating yesterday whereby the government will suspend parliament in early September in order to bring forward a new Queen’s Speech on 14th October. Our estimate of the original parliamentary timetable is shown below:
The proposed shutdown means that approximately 7 days where the commons was due to sit, they will not be able to.
Boris Johnson’s request to the Queen will in essence suspend parliament for a month, however the party conference season during which parliament does not sit, is also within the suspended period meaning the actual impact is slightly reduced. That said, with only 22 scheduled business days for the House of Commons between now and the Brexit deadline, removing around a third of these will cause procedural issues for opposition plans to legislate to prevent a no deal Brexit. Sterling’s reaction has been a sharp fall vs both the dollar and the euro from already suppressed levels. Domestic focused UK stocks have under-performed International peers as the heightened risk of a no deal secession begins to be priced into markets.
With the outcome of Brexit remaining volatile and unclear, sterling will remain under pressure and trade within a range that reflects the dual possibilities of a deal and a disruptive exit. As a result, we have asked our fund managers to maintain their underweight to UK assets despite the valuations on offer.