The Prime Minister seems to have achieved her goal of setting out a plan without giving too much away and markets – for now – appear happy to give her their backing, said Chris Beauchamp, chief market analyst at IG.
“The major development from [the speech] is that Parliament will get full oversight of a deal and a chance to vote on it as well,” he said. “In addition, the PM struck a conciliatory tone that will have calmed many who feared that the UK was about to embark on an acrimonious divorce.
“Whether that tone is matched by the EU remains to be seen, and the PM was careful to stress that the UK would not roll over and surrender meekly in any negotiation.”
Chris Cummings, chief executive of the Investment Association, said he was happy with May’s speech but recognises that the plan still needs a lot of work: “We welcome the Prime Minister’s speech on Brexit, setting out the importance of avoiding a cliff-edge for financial services being provided to clients in the EU, and ensuring a pragmatic implementation period for the new trade deal with the EU.
“Much work is needed to ensure that the terms of the future relationship with the EU safeguard the interests of savers and investors throughout the world who make use of Europe’s pre-eminent asset management centre in the UK.
“The Prime Minister also emphasised the urgency of providing certainty for EU workers in the UK – who make up 11% of workers in the asset management sector. The asset management industry relies on the UK remaining open and attractive to global talent.
“We look forward to working with government to deliver the vision of the UK as the world’s leading investment hub.”
However, David Lamb, head of dealing at FEXCO Corporate Payments, reiterated that it will obviously be a hard Brexit and that he could see a bumpy road ahead.
“The benign limbo is over. Emollient though it was, the Prime Minister’s speech left no room for doubt – Brexit will be hard and total,” he said.
“Britain’s continued membership of the single market was always a long shot. In the end it was sacrificed on the altar of immigration control – the two were simply too incompatible.
“The Pound rallied after today’s inflation figures and on Mrs May’s confirmation that both Houses of Parliament will have a vote on the final terms of Brexit. But reality will ultimately sink in.
“So while sterling is enjoying a recovery, it is now more exposed than before. With any lingering hopes of a partial or fudged Brexit gone, the support that such comforting vagueness once provided has also evaporated.
“While the Prime Minister talked of providing ‘certainty where possible’, she also vowed not to provide a running commentary on Brexit negotiations.
“The information vacuum this creates will put the Pound even more at the mercy of rumours and skittishness than before. The result can only be continued volatility – we should expect a bumpy road ahead.”
Kames Capital’s chief investment officer, Stephen Jones, is more pragmatic: “Theresa May’s speech [said] in positive but clear terms that we are prepared and indeed planning to go it alone and leave all aspects of our arrangements with the 435m peopled EU trading block.
“The economic consequences of this remain elusive and will now greatly depend on the attitude forthcoming from those on the other side of the negotiating table. This is where the first difficulty begins in assessing the future as it is by no means clear who will be across the table in the negotiation given the European electoral timetable over 2017.
“In the meantime it is reasonable to expect that government policy, and that of the Bank of England, will remain very supportive of economic activity. The UK needs to be seen to be a growing and attractive economy for Europe and the rest of the world to engage with.
“Sterling has been the barometer of the success or otherwise for the approach being pursued by the UK; it is notable that it bounced well off its recent lows during and immediately after the speech. We strongly suspect this will now continue and, having outlined a path that many have been thinking is a worst case scenario, the outcome may well be considerably better.”
Unfortunately we just need to wait and see what the finals plans are for Brexit and how the EU will react – as Ken Clarke said on the BBC, “We are still completely in the dark.”
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