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By Steve Forbes

I have written in the past about the impact of Brexit on the UK (only today it was announced that an additional £15bn of foreign investment has been made into the UK in the last six months) and I do not feel the need to repeat it here. 

What I will say is it feels like the chances of the EU being as we currently know it, when we leave, are reducing by the day.  Italy appears to be the next Greece in waiting and I do not believe they will be as prepared to sit and take their medicine from the Germans as the Greeks did. 

Is it fanciful to imagine them leaving the Euro enabling them to devalue their own currency as they did repeatedly when they had the Lira? 

Not from where I’m sitting.

Deutschmark 2.0

If Italy goes it is likely others will follow, Spain and Portugal spring immediately to mind and it could well be that the Euro ends up being a solely Northern Europe currency, in effect a  Deutschmark 2.0. 

It is also possible many of the issues that prompted the Brexit vote, free movement between countries being the main one, will end up being restricted within the EU before any Brexit takes place as these are issues that do not solely resonate within the UK.

However, the main factor that could eventually see the break-up of the EU is if the UK is seen to be successful once it leaves. 

Therefore it would be wise to anticipate obstacles being thrown in our way as an easy departure is the last thing those behind the EU experiment want to see!

The Great Unknowns

So as well as Europe being likely to suffer some major upheavals we can add the Trump presidency to our list of great unknowns. 

Normally the greatest concern one has over a new US president is their finger being on the Nuclear button, not the Tweet button. 

No doubt members of the US diplomatic corps are suffering sleepless nights in anticipation of the 20th January and wondering how they can block wi-fi in the White House. 

I am sure “the Donald” will command as many column inches in the next twelve months as he did in the previous twelve!

Money, Not News, Makes The World Go Around

So we have a lot to anticipate in 2017, but no matter how disrupting the events we see appear, as 2016 showed it is money that makes the world go around and not news. 

If twelve months ago you had been told all that would occur, I bet that never in a million years would you have thought that the FTSE100 index would be up over 12% and the S&P500 by 10% by year end.  

Proof that you should avoid making knee jerk reactions on sensationalist headlines.  

Steve Forbes, Managing Director, Alan Steel Asset Management

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