Brexit And Pound Decline: Impact From Pharmaceuticals To Jet Engines

  • The most tangible impact of Brexit so far has been the falling sterling.
  • Near 15% decline of the currency since the vote should in theory create problems for many US competitors.
  • Due to the peculiar nature of the British economy, the outcome is a little more unexpected.

A few months ago, when I was asked about the potential impact of the Brexit vote by our clients, my answer turned out to be half right. I was not worried much about a “no” vote for two reasons. First, I assessed the likelihood of a “no” vote as very low – a conviction that was subconsciously biased due to the precedent of earlier Scottish independence vote of 2014. Secondly, I was not too concerned because I knew a bit about the peculiar structure of Britain’s economy and its potential impact on the rest of the world.
Fast forwarding a few months and here we are, the “no” vote has toppled a government and driven the pound to 25-year lows. But what is the impact on Britain’s key trading partners and why is the British economy so peculiar? More importantly, a large and potentially permanent shift in the exchange rate ought to have created investment opportunities?
Read to full article on Seekingalpha…