Make sure your finances are Brexit-proofed

AS the UK faces the possibility it might crash out of the EU without a deal next March, now is the time to make sure your finances are able to withstand the impact.

Stock markets, house prices and the pound have all been hit by Brexit uncertainty and the volatility could dramatically increase if MPs reject Theresa May’s deal on Tuesday.

This seems likely and there is even the chance of a general election or a second referendum, which could trigger further chaos, so it pays to be prepared.

INVESTMENTS

This has already been a volatile year for stock markets, with the FTSE 100 down 8 per cent yearto-date as the US-China trade war and rising US interest rates also spook investors.

However Alex Wright, portfolio manager of the Fidelity Special Situations Fund, said the UK could be among the top performing stock markets next year as the “unrelenting negativity” has been overdone: “That might sound counterintuitive but markets have a way of confounding expectations.”

Investors hate uncertainty but may come flooding back whichever way Brexit is settled, he added: “Unloved British stocks could surprise in 2019.”

Investment funds Lindsell Train UK Equity, Fidelity Global Dividend and Investec Global Gold could help Brexit-proof your portfolio, Fidelity said.

Saxo Bank chief economist Steen Jakobsen said that UK share prices could take a big hit if Jeremy Corbyn’s Labour Party sweeps to power after a shock general election.

He said Corbyn would launch “a mid-20th century-style socialist scorched earth campaign to even out the UK’s gross inequalities”, nationalise the utilities and soak the rich. The result is likely to be that “inflation rises steeply, business investment languishes and foreign residents run for cover, taking their vast wealth with them”, Jakobsen said.

There has been an increase in investors rushing to buy gold and cash as a safe haven but Alex Barry, head of UK distribution at fund manager Legg Mason, said: “We understand the need for investors to protect themselves but gold and cash have failed to deliver again this year.”

Jason Porter, director of wealth advisor Blevins Franks, said the best protection is to invest in a diversified spread of global equity funds as well as bonds, cash and property: “This can help you survive unsettling short-term market movements and limit your exposure in any one area.”

PROPERTY

House price growth has dipped to a five-year low although transactions remain healthy and north London estate agent Jeremy Leaf said: “Many buyers and sellers are shrugging off Brexit concerns and taking advantage of today’s low mortgage rates.”

Once Brexit is sorted the property market could quickly start moving again. This could be a good opportunity for buyers looking to negotiate a bargain before Christmas.

Joshua Mahony, chief market analyst at IG, said Bank of England governor Mark Carney’s recent prediction of a 30 per cent drop in prices under no-deal looks sensationalist. “However the threat is certainly going to scare off most investors until we see Brexit certainty,” he said.

FOREIGN TRAVEL

If you are planning a winter getaway your pound will not travel as far as Brexit uncertainty knocks sterling.

The pound trades at €1.12 but you get less than one euro at most airports, with Travelex at Heathrow offering just €0.94 and Moneycorp at Stansted €0.89.

Ed Gott, head of private client dealing at Caxton, said: “With sterling down 3 per cent in the last fortnight, achieving the best possible rate has never been more important.” Best rates are available online at Asda, Caxton, FairFX, ICE or the Post Office, often with free home delivery on larger orders of £500 or more.