At the current rate of fluctuation, with socio-political uncertainty reeking chaos in the markets, the pound’s performance leaves little to desire. Currency experts are now warning that further in 2017 we could see the pound hitting the same value as the euro.

According to the Sun, analysts have advised towards this possible plunge due to the general election, which resulted in a hung parliament, and the closing on the Brexit deadline.

Holidaymakers that are worried about the potential currency volatility ahead are being told to buy half their currency now and half closer to their break, as the pound could even break below the euro.

Finance Monthly has heard Your Thoughts on the possibility of a British value parity with the euro and included a few of your comments below.

Jonathan Watson, Chief Market Analyst, Foreign Currency Direct:

The prospect of the GBP/EUR exchange rate reaching parity or 1 GBP = 1 EUR has been raised many times over the course of recent events, before and after the Referendum vote. Throughout 2017 analysts have been split as to which direction rates will take, I believe there are two key features which explain why we are here and which will ultimately shape the likelihood of it being achieved.

Parity was almost reached in December 2008 when GBP/EUR hit 1.0227, since then the July 2015 high of 1.4345 had seemed to indicate such lower levels were confined to history. However, since 2016 and the result of the EU Referendum, politics has become the big driver on Sterling. Political concerns too have reached Europe and the failure of Le Pen and Gert Wilders to win any victory has seen the Euro strengthen. There is a German election in September and potentially an Italian vote too to be called in September, but, for now it seems the Euro has survived and this has helped it gain against the politically scarred Pound.

Economic data is the second factor and here too we see the Eurozone outshining the UK growing 0.5% in Q1 2017 against the 0.2% for the UK. Divergence in monetary policy is also key as the UK and the Bank of England could potentially raise interest rates to combat rising Inflation, threatening consumer spending and lowering GDP. Meanwhile the European Central Bank are looking to withdraw stimulus and maybe raise interest rates in the future, helping to further boost the positive sentiments towards the Euro.

Ultimately the prospect of parity is not going away and the outcome of the UK election is vital to determining how likely, as it effects who is on the UK side of negotiations with the EU and how strong their mandate is.

We are only 2 months into the Article 50 window and just coming up to the one year anniversary of the vote on the 23^rd June. We have in the grand scheme of history just begun on this path and looking at what is ahead the prospect of parity for GBP/EUR this year remains a very real possibility.

Owain Walters, CEO, Frontierpay:

Ahead of the election, some analysts warned that the value of sterling will reach just £1 to €1. The political uncertainty following the election hasn’t eased the short-term risks to the Pound. However, I would argue that this result will, in the long term, be good news for sterling.

What I believe we will see next, as the Conservatives are forced to form a coalition with the DUP, is that Theresa May’s plan for a ‘hard Brexit’ will be diluted, if not taken off the table entirely. Since the vote to leave the European Union last year, the currency market has, on the whole, not responded well to the dialogue around a “Hard Brexit” and with the influence of a more liberal party in a new coalition government, the idea of a ‘softer’ Brexit will provide support to the Pound and we will see a period of strength.

The significant losses that the SNP has seen will also reduce the chances of a second Scottish independence referendum. While the notion of another Scottish referendum hasn’t done irreparable damage to the pound, taking it off the table at least for the foreseeable future will certainly give the Pound an extra boost.

Patrick Leahy, CFO, JML:

If the political events of the last two years have shown us anything, it is that situations that are improbable are certainly not impossible. Sterling/euro – or even sterling/dollar – parity is not out of the question. Whether you are an importer or exporter of goods or currency, CFOs across the country would rather the whole thing settled down and we had some certainty; but that’s unlikely. So what can you do?

Being in the FMCG market, JML’s short-term retail price is fixed, and it takes a good year to adjust prices. Just look at the large drop in sterling, post Brexit; it is only now that the inflation effect is really starting to trickle through to business and consumers. So, as a CFO with no concrete forecast on what will happen with the rates, you must try to minimise the impact any movement has on your pricing and margin strategy.

As a net importer, UK businesses and especially retailers are always susceptible to falls in rate, pushing up our costs, reducing margins, or lowering volumes. In some ways, the best strategy any business can have to manage exchange risks is to sell to other parts of the world – it’s a natural hedge. But, it is not that simple, because margins in each country are important and you can’t always point to your exchange gains when discussing gross profits with your invoice discount provider.

For retailers, the key is to not overstretch yourself if hedging on currency movement. Regularly and accurately forecasting your business performance is key to achieving this. It’s impossible to know exactly what your currency requirements are in 12 months’ time, but you know you will have some. You might win and lose on currency movements along the way but by slowly building your hedged positions you will have minimised the risks and helped the business achieve its margin along the way.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

“If there’s one thing that’s certain in business, it’s uncertainty” – Stephen Covey, US author. You’ve probably heard this a few times in your life. Here Ed Thorne, UKI Managing Director at Dun and Bradstreet, talks Finance Monthly through the current situation in the UK, the uncertainty that looms, and the confidence that is being pushed throughout.

We are without doubt a nation sitting in a world in flux. Business confidence is shaky, as recent geopolitical and economic issues have created an uncertain business landscape. For the UK, the vote to leave the European Union has created a volatile UK market; with the pound’s value dropping, inflation is at its highest point since September 2013, and reports that the cost of some imports could rise by eight per cent after the UK finally leaves the EU. But where does this leave businesses?

A recent survey by the London Chamber of Commerce and Industry found that business confidence is actually growing despite increasing cost pressures (including raw materials and oil prices) and the devaluation of the sterling still lingering. It’s also been reported that business confidence among the UK private sector is now at its strongest level since mid-2015, thanks to a strong economic backdrop and improving client demand.

There are businesses that are thriving in the UK despite the uncertainty; in the past few months, the tourism and manufacturing industries are experiencing an all-time high. The Office of National Statistics revealed that tourism to the UK has increased by 13% from November to January year-on-year. The reduced cost of visiting the UK for American and Eurozone tourists, appears to have caused tourism to skyrocket. The same applies for British manufacturing; CIPS’ latest figures from February reported solid growth of output and new orders. These factors suggest that many UK businesses are actually doing well at the moment, despite Brexit.

It might not all be plain sailing, though. UK businesses need to keep one eye on the global currency; as the pound fell precipitously after the Brexit vote and the dollar could very well strengthen. If this does happen, it could affect the fortune of both net importers and exporters – so definitely something to watch closely!

And it’s important to remember that the UK hasn’t fully left the EU yet, and much is yet to be worked through before the June 2018 deadline. Failure to negotiate a good trade deal, or indeed any deal, with the EU could have a significant impact on business confidence. Our Dun & Bradstreet economists have advocated a calm and cautious approach for businesses, recommending continued monitoring of developments rather than responding too quickly. The impact of Brexit on migration, interest rates, house prices and even food prices, could have considerable effects on business confidence in both the short and long term.

Business confidence in the UK is not solely centred on national companies. For decades, the EU has simplified trade regulations to allow labour, capital, goods and services to move freely across borders. Companies across the world that rely on the UK as a base for business in Europe can no longer take these benefits for granted when Brexit is set in motion. This could certainly impact the growth potential for UK businesses and stall opportunity for those companies looking to expand. Global companies operating in the UK and Europe also face greater compliance and regulatory challenges, as uncertainty plays an increasing role in the market.

Stephen Covey’s words about business uncertainty ring louder right now than any time in recent memory. Although risk and uncertainty is an accepted part of our increasingly complex global environment, it doesn’t make it any easier to deal with for the modern business. Against a backdrop of uncertainty, companies doing business with or in the UK can use data and analytics to stay abreast of market trends, and effectively manage relationships with customers, suppliers and partners to minimise risk.  Business confidence in the UK is likely to continue on a rocky road for the foreseeable future and companies need the right tools and information to help them stay ahead and navigate to success.

Last week Brexit Secretary David Davis said the UK will not be paying the EU’s expected €100 billion ‘divorce bill’ in order to leave the Union. Michel Barnier, the EU’s Chief Negotiator said it’s not a punishment, simply a settlement of accounts.

This ‘divorce bill’ is expected to be the most fought over and sensitive areas of the Brexit negotiation process between the UK and the EU.

Below Finance Monthly has heard Your Thoughts and listed comments from various expert sources.

Ben Martin, Founder, The Brexit Tracker:

A €100bn EU exit bill, paid upfront represents 18% of all income earned in the UK in the first three months of 2017. Or 239% of the annual increase in UK income earnings (12 months to March 2017 vs March 2016.) [Source:  ONS GDP March 2017.]  Either way it’s a huge figure.

So, whatever the eventual EU exit bill - €65bn or a net €42bn cost (or lower) – it’s going to take time to agree.  Or continue to not agree.

Both sides have set out their negotiating stalls; the UK is looking for a parallel track (let’s talk about the terms of the exit and the bill together) vs. the EU (pay your bill first.)  This will take months to resolve, even without the French and German elections. The sign off process will be arduous in the extreme as no individual will want to go down in history as the person who got it wrong. Agreement on what ‘Exit 2019’ looks like is a long way off.

The biggest losers of this head to head are businesses who need to plan for what the 2019 exit will mean for their operations. Employees will also suffer, due to the continued uncertainty surrounding EU workers right to remain, reduced investment spend and lower associated hiring as firms delay strategic investment.

What should businesses do now?  We’re encouraging them to assign Brexit responsibility to an individual in the firm; to review Brexit through the firm’s lens; to establish a reporting procedure to keep the CEO/Board/entire business + employees up to date on the changes Brexit may bring. And to create Brexit Key Performance Indicators. What can be measured can be improved – so we’re helping business start that measurement process.

Businesses must navigate Brexit by accepting continued uncertainty and actively tracking the possible implications.

Markus Kuger, Senior Economist, Dun & Bradstreet:

Although Article 50 has been triggered, it's still far too early to say how the negotiations will unfold - particularly as the general election results in June could change the government's priorities. Currently, it's clear that the UK is keen to present a firm negotiating stance and avoid any political damage from the prospect of a hefty Brexit bill. It's almost certain that some compromises will need to be reached, but where the UK will make concessions, and the size of any potential settlement, remain to be seen.

Positively, real GDP growth is still reasonably solid, labour market conditions sound and stock markets are rallying. However, forward looking indicators have deteriorated somewhat over the past months, pointing towards more challenging operating conditions as Brexit negotiations unfold. As a result, we are maintaining our DB2d country risk rating, down from the DB2a before the referendum, and the 'deteriorating' risk outlook. The best advice for businesses is to monitor the progress of negotiations and use the latest data and analytics to assess and manage risk during this period of uncertainty, and identify any potential opportunities for the post-Brexit world. A careful and measured approach to managing relationships with suppliers, customers, prospects and partners is key.

Charles Fletcher, Head of Analysis at Cogress:

The UK is caught in the midst of uncertainty surrounding Brexit, now compounded by Theresa May’s snap election. Brexit is unfamiliar territory and presents potential risk to the future of the UK, but so far the economy has remained resilient and this should continue to instill confidence in the country’s future. Papers have been reporting various figures for the UK’s so called ‘Brexit Bill’ ranging from 50bn to 100bn euros, but this remains conjecture as no hard facts have been made clear yet.

Until more information about the nature of the negotiations is released, the exit cost will remain a guessing game and potentially a dangerous one, as speculations on the Brexit bill can only fuel unnecessary anxiety around the future of the UK economy.

However, I would argue that although the "divorce bill" will be one of the most sensitive points during the negotiations - at least for the general public - it's the trade deal that the business community will be watching closely. As a safe harbour in a storm, the property market has always shown great resilience especially at times of uncertainty, and some foreign investors might even benefit from more favourable exchange rates. However Brexit may well cost other sectors dearly, especially those such as manufacturing which can afford uncertainty the least.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Given that it has been more than a month from the date Article 50 was triggered and the two front runners in the French presidential race are confirmed, just how well are UK markets doing and how are global ones faring in a time of such regular change? Michelle McGrade, Chief Investment Officer at TD Direct Investing lists for Finance Monthly her top ten tips on investment pre/post Brexit.

Time for a bit of sense and sensibility

As we got closer to Article 50 being triggered, investors were becoming a little more confident about what Brexit could mean for their investments. Over a three-week period, concluding the same week Theresa May finally penned her letter to President Tusk, the number of our customers who didn’t know whether the decision would be positive for their investments dropped from 44% to 35%, suggesting that investors were initially a bit spooked by the uncertainty, but as things became clearer, their sentiment became more positive.

UK equity market valuations look attractive

That is if we look at price to earnings (P/E) ratio (this measures the market price of a company's stock relative to its corporate earnings). The below chart represents equity market valuations of five geographical regions based on P/E ratios. We can see that the FTSE All-Share index is priced just above MSCI Asia and MSCI Emerging Markets, both of which are considered attractive right now.

Past performance is not a reliable indicator of future returns.

Source: Bloomberg to 31^st March 2017

So did global markets reflect this positivity as well?

The US market looks a bit stretched

Using the same chart from above, it clearly shows that US equity market valuations are looking a little stretched. This trend is mirrored in the below chart looking at price-to-book (P/B) ratio (which measures a company's market price in relation to its book value); again using the same five geographical regions.

Past performance is not a reliable indicator of future returns.

Source: Bloomberg to 31^st March 2017

Does this mean that the US bull run is about to come to an end?

The equity bull market is entering its eighth year, and for US stocks this is the second longest bull market since WWII (the longest having been between 1987 and 2000).

The current bull market is different from the 1987-2000 period, in that interest rates have fallen throughout. Bond yields have also declined to historically low levels, as demonstrated in the next chart. The major concern this time is that the majority of recent equity returns have been driven by investors bidding up prices in a global hunt for yield while earnings have remained flat. This might also have something to do with the way investors react to volatility; different to how they have done so historically.

Past performance is not a reliable indicator of future returns.

Source: Bloomberg to 31^st March 2017

What is the VIX telling us?

The Volatility Index (VIX) (market sentiment indicator) remains at depressed levels. The chart shows that the opposite trend between S&P 500 and VIX has reached an extreme level: 2364 vs 12.

Historically, spikes in the VIX coincide with sharp drops in the S&P 500 but as the chart demonstrates, huge spikes are a rarity in the last five or so years.

Past performance is not a reliable indicator of future returns.

Source: Bloomberg to 31^st March 2017

What can we deduce from this?

The data shows market valuations are stretched in some geographical regions. This comes against a backdrop of the potential threat of rising interest rates and occasional volatility, triggered by events like Brexit.

Despite the fallout from Brexit and upcoming elections in France and Germany, the outlook for global equities over the medium term remains cautiously optimistic. With global economic indicators strengthening and earnings picking up, global equities could deliver modest returns but with higher volatility. Additionally, there is the prospect the new US administration will push through pro-growth policies that are likely to provide a substantial boost to corporate earnings, but these are yet to be confirmed.

Despite high valuations of US equities, they are still attractive to hold due to the high-quality nature of the US market. The longer-term outlook on emerging markets looks potentially positive as they are cheaper than developed markets.

So, what 10 things should investors do as Britain secures its long-term future?

1. Have a clear investment strategy

Martin Cholwill, fund manager of the Royal London Equity Income, recommends that investors go for ‘dull and reliable’ instead of being dazzled by what seems ‘exciting’. Richard Buxton, fund manager of Old Mutual UK Alpha, agrees that having a clear investment strategy is important. He said: “The key to unlocking any investment reward is to have a high conviction approach and a fair bit of patience.”

2. Invest for growth

If you’re investing for growth, it’s normally recommended that you think about a minimum time horizon of five years or more.

3. Invest for income

If you’re looking for income, consider funds which invest in high-quality companies which are backed by cash flows, giving them the ability to pay dividends out of cash reserves.

4. Stay calm & stay invested

Remember: it’s about time in the market, not timing it! Use regular investing to take the emotion out of investing and not over-commit. Should any opportunities arise, you’ll also be well-positioned to take advantage of them.

5. Run your winners

It’s difficult to do, but the aim should be to buy at, or close to, the bottom and sell at the top. Run your winners. This basically means holding on to your investments that have done well, although it can be a good approach to take some profits - known as 'top slicing'.

6. Cut your losses

Don’t be afraid to cut your losses if an investment is clearly not going to gain in value. But remember, you only crystallise a loss if you sell, so if you think the value will rise again, hold your nerve and stay invested.

7. Don’t get trigger-happy

The most skilled fund managers don’t expect instant success. When we asked our Best of British fund managers how long they typically held onto stocks for, the average period was three to five years. See what stocks the Best of British Fund Managers are holding most.

8. Don’t believe the hype

Investors stand to benefit from not buying into the hype around particular shares or sectors, and to stick to their guns and invest regularly. Investors’ tendency to follow performance, which frequently sees them buy at the top of the market and sell at the bottom, can be painful and costly.

9. Back the Best of British

You can’t ignore a solid track record. Our Best of British Fund Managers list contains some core fund managers who have been there and done it through market ups and downs, riding out difficult times to deliver long-term outperformance.

10. Embrace opportunities

Take your time, think about your long-term investment goals, but embrace any opportunities that arise.

Last week Governor of the Bank of England and Chairman of the G20's Financial Stability Board, Mark Carney said London is “effectively, the investment banker for Europe.”

Many believe companies and financial institutions should move their trading to the continent, while others believe this is non-sensical given London’s capital position globally and in the markets. Some companies, such as Goldman Sachs, HSBC and UBS, have already confirmed the eventual moving of staff and trade abroad, once the UK leaves the EU.

At the same time, the UK is faced with a lack of skilled labour, and due to the uncertainty surrounding changes in immigration law and the movement of employees or recruitment across the continent, bosses of big companies such as Barclays are calling for the freedom to recruit freely outside of the UK.

This week Finance Monthly hears Your Thoughts on the moving of business to the EU post-Brexit, and below are some comments from reputable sources within the business sphere.

Bertrand Lavayssiere, Managing Partner, zeb:

For those institutions with EU clients in their roster, it is more than likely that they will have to move to the EU post Brexit. However, there are a few buts…

One of the critical aspects is ‘passporting’. At present, banks can operate within the EU under UK regulations with relatively light approvals required from local regulators. This is of key importance for large sectors of the industry, such as asset management, where more than a trillion GBP is under management for EU-based investors, corporate lending, reinsurance and securities trading platforms, to name just a few. If this is maintained - which seems unlikely today - then the need to move is not crucial.

The long-standing cooperation between EU and UK regulators could ease some of the pain if governments agree that joint efforts to maintain alignment will help the overall goal of financial stability. Furthermore, many of the pertinent regulations are global anyway - those from the Basel Committee or the IASB, for example.

With regards to the London market, there are a number of platforms for specific product lines (foreign exchanges, swap contracts, equity derivatives, etc.) to facilitate compensation, settlements of trades among market players, and volumes to ensure liquidity. In simple terms: London is the place for such platforms. Disagreements have already taken place with regards to whether those platforms could remain in London. If the decision is yes, it will be business as usual. If, however, the answer is no (the most probable outcome), then the trading platforms and back offices of stakeholders have to move. This includes the day traders and market makers who are crucial for the liquidity of the market.

There is a whole list of further variations on this issue. But all in all, it is essential that a financial institution with clients based within the EU considers its strategic options as of now. Establishing a presence in the EU needs at least 18 months from a regulatory stand point. As many EU regulators require a fully-fledged decision making unit through proper governance, the analysis of the changes in delegation of authority schemes and the assessment of potential human resources impacts must be considered early on in the process.

Paramount in the decision-making process should be the institution’s business potential, to follow their customers, and ongoing requirements, rather than solely the regulatory aspects.

Ben Martin, Founder, The Brexit Tracker:

Moving your business away from the UK is a major undertaking. Perhaps you were considering this prior to the Brexit referendum or more likely, you believe leaving the EU will make your business operations untenable. But before taking action, we suggest you calculate and monitor the financial impact of Brexit on your firm and compare this to the emotional ‘pull’ of moving to the EU.

Here’s our 5-point plan:

1. Calculate how Brexit has already impacted your firm. From over 390 economic indicators we’ve reviewed, the biggest market-related change has been GBP Sterling dropping 15% (now 12% weaker.)  How has this impacted your business?
2. Continually assess and record how new facts surrounding the UK/EU relationship will impact your £ calculations
3. On relocation – consider how you will continue to serve your UK customers.  With a weaker GBP, your UK sales are likely to be worth 12% less
4. A move will impact your business banking.  UK banks/lenders will need convincing of the merits of a move (and the enforceability of their security) to continual their financing
5. Consider your existing and new competitors – will a move provide an advantage to you or them?

In summary, firms need the full “Brexit facts” before undertaking a move to the EU – as the facts are in short supply, they should start their own Brexit monitoring system.

Oliver Watson, Executive Board Director for the UK and North America, PageGroup:

As is to be expected, multinational businesses are more cautious than UK SMEs when it comes to hiring in post-Brexit Britain – and, as I see it, there are two reasons for this.

With a variety of other investment opportunities elsewhere across the globe, large international businesses – who are under no obligation to invest in the UK – have the ready option to divert investment to other more certain markets. As a result, their talent acquisition will naturally become focused in a different direction or geographical location.

However, where SMEs generate the bulk of their revenues in the UK don’t have that option – they just have to get on with it. This means while multinationals are feeling cautious about UK hiring, for SMEs it is often business as usual. This is a pattern we’ve seen time and time again in the face of uncertainty.

Mary Wathen, Partner and Head of Agriculture and Rural Affairs, Harrison Clark Rickerbys:

The Agricultural sector relies heavily on EU workers. Around 15% of the total workforce is from outside the UK. The uncertainty around the status of EU workers threatens to hit the agricultural sector hard if the status of EU workers isn’t clarified.

Despite the uncertainty, there are steps which savvy agricultural employers can take now to minimise the disruption. Taking action ahead of time will help maintain the flow of workers for each harvest, protecting both the business and the livelihoods it supports.

Employers need to ask themselves some key questions about their workforce:

• how many migrant EU permanent or seasonal workers do you have?
• how many are key staff, responsible for driving production, harvest or sales?
• how many have been in the UK long enough to acquire permanent residence?
• How many of your workforce are committed to remaining in the UK?

For smart agricultural employers, the so-called crisis provides an opportunity to build their employer brand.  Employers are enhancing their working relationships with key employees who meet the requirements for permanent residency and want to remain – introducing them to specialist agricultural immigration advisers and supporting employees through the application process.

But this isn’t the solution for the seasonal workforce shortage. The fruit-farming industry employs 29,000 seasonal workers, who go back to their home countries after six to nine months in the UK. They won’t be eligible to apply for permanent residency. Virtually all of them come from the EU, mainly Romania and Bulgaria, but also Poland and Hungary. If the Government ends freedom of movement, a return to the old-style permit scheme seems the only option to protect the harvest and UK agriculture.

Richard Thomas, Employment Partner, Capital Law:

One key issue for the forthcoming Brexit negotiations will be the issue of EU Immigration following our exit from the UK. There is no doubt that the UK Government will seek to put in place some form of “controls” on EU immigration after the UK leaves the EU but it is entirely unclear as to what form these controls will take and/or who they will apply to. Will the controls apply to unskilled, semi-skilled or skilled EU migrants? Who makes the decision as to what constitutes a semi-skilled or skilled role? Is there any appeal against this decision?

It has also been suggested that the UK will allow all current EU nationals working in the UK to remain in the UK after the UK leaves the EU but it is not clear whether this will be indefinitely and whether it will apply to non-working spouses and/or children. Ultimately no promises have been given and it is a matter for negotiation between the EU and the UK, although it is hoped that the issue will be resolved quickly.

In addition, in April 2017 the UK Government introduced the Immigration Skills Charge imposing a charge of £1,000 per year for employers sponsoring a worker from outside the EU. It is quite possible that the UK Government will extend this charge to EU workers who do not have rights of permanent residence once the UK leaves the EU.

Given the current uncertainty and potential cost the best advice to SME’s with EU workers who have been working in the UK for at least 5 years is to get them to make an application for Permanent Residence as this should provide a guarantee of an individual’s continuing right to work in the UK.

However, individuals making the application will have to complete an 85-page form and provide huge amounts of supporting documentation confirming what they have been doing in the UK for the last 5 years. This is an arduous process to say the least but there appears to be little alternative as (unlike some EU countries such as Germany) the UK has no central register of the identities or even the numbers of EU citizens currently working in the UK. The Home Office has stated that it is looking to use an online application process but there does not appear to be any additional funding for this.

Katherine Dennis, Associate in the Employment, Pensions and Immigration team, Charles Russell Speechlys LLP:

The EU referendum has caused a lot of uncertainty for EU nationals and their employers as to what their position is in the UK and what will happen when the UK exits the EU.  This is clearly an important issue for many SMEs, especially as sponsorship of overseas workers through the UK’s points-based system becomes increasingly expensive.

Importantly, free movement will continue to apply until the UK formally leaves the EU. This process was started on 29^th March 2017 by the UK government giving notice under Article 50 of the EU treaty. There will now follow a two-year negotiation period, which could be extended by agreement of all member states. The earliest the UK would leave the EU is therefore the end of March 2019. Until then, EU nationals are still free to work in the UK.

The UK government has clearly stated that it wishes to control migration from the EU, while still attracting those whom it considers have the most to offer the UK. It is highly likely therefore that the UK will introduce measures to restrict free movement. It is also therefore likely that it will be harder for employers to recruit EU nationals and it may be difficult for EU nationals to work in the UK on a self-employed basis.

At the moment, there is no firm indication as to the type of system which might be put in place and much depends on what the UK government is able to negotiate with the EU.

Possibilities include a new work visa system for EU nationals or expansion of the current points based system, which enables employers to sponsor skilled workers in the UK (although it is currently limited to professional roles at a certain salary). It is unlikely visas will be required for short business trips. Other possibilities include retaining limited free movement with measures to cap numbers, such as quotas or temporary ‘cooling-off periods’. Concessions may be made for sectors where there is a recognised labour shortage.

The UK government has stated that it intends to consult with businesses and communities to obtain the views of various sectors of the economy and the labour market. It is therefore crucial that employers and business-owners who are concerned about the impact of Brexit on their workforce respond to the government’s consultation when it is issued.

In the meantime, EU nationals who are eligible to apply for permanent residence (i.e. those who have been resident in the UK for five years or more) or British citizenship should do so now to ensure their continued right to work in the UK.  EU nationals who have not reached the five year point when the UK exits the EU are in a more vulnerable position.  It is sensible for those EU nationals to apply now for an EEA Registration Certificate, which confirms that they are currently living and working lawfully in the UK under EU provisions, in case this fact becomes important in any future transitional arrangements.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

The snap UK election in June and the second round of voting in France in May are galvanising investors to buy physical gold to protect against the uncertain election outcomes, according to investment firm The Pure Gold Company.

Chief executive Josh Saul said: “This past week has seen a surge in gold buyers, and this morning especially, our clients are looking to take advantage of a drop in the gold price as the French presidential polls favour moderate candidate Emmanuel Macron.”

“People purchasing gold this morning and taking advantage of a lower price remember that Clinton lead Trump in the polls and the Remain camp led over the Leave voters. The polls have been an unreliable indicator in the last few momentous votes and the general sentiment is that if people can find a way to hedge themselves with gold at a discount then they will heed the opportunity. We've seen many clients who purchased last week place orders this morning in order to reduce the overall average price that they have bought at.”

“43% of people purchasing gold have been first time investors who say their motivations for buying gold is to remove exposure to equities. They’re worried that a Marine Le Pen victory in France, uncertainty over the UK's general election in June or an escalation in hostilities between N Korea and US could result in a considerable decline in global stocks. People are purchasing gold as a hedge against these events occurring whilst hoping that they don't. This is especially true for retirees. We have seen a 105% increase in people purchasing physical gold through their SIPP or Pension in the last seven days to protect their investments from election uncertainty.

“Our largest order last week was a single purchase of £1.3m of 1oz gold Britannia's. The client was driven to invest in gold by "elections everywhere he looks." He is convinced that somewhere, at some point (soon), there will be a crash and he wants to ensure that some of his wealth has been removed from the financial system. His motivation is not to make money but instead to protect himself against financial volatility. Still, he does believe that the gold price will perform similarly to last year, and he wants to ensure that if the value of his gold grows he manages this growth in a tax efficient manner, hence his preference for tax free UK gold coins.”

(Source: The Pure Gold Company)

Business insurance firm Hiscox recently produced a resource that might be useful for businesses pre- and post-Brexit. It is a side-by-side comparison table of the UK, France and Germany and displays how easy it is to do business in each country.

It features all the main tax rates, employment laws, costs and incentives in each of the three biggest economies. The resource is designed for those businesses in the UK considering relocating to an EU country after Brexit.

You can view the full table in a pdf here.

(Source: Hiscox)

As Article 50 has finally been triggered, Michelle McGrade, Chief Investment Officer at TD Direct Investing, talks Finance Monthly through the key areas investors should consider, and answer a question many investors are thinking: ‘What are the investment opportunities open to me in a post-Brexit world?’

Following the UK’s vote to Brexit, our customers over at TD Direct Investing told us their biggest concern was how the UK Government would manage to implement its plans to trigger Article 50. And, more recently, we have seen increased uncertainty about what Brexit will actually mean, with approx. 40% saying they don’t know what impact it will have on their investments.

Here I’ve focused on six key areas I believe you should consider – and bring you 50 Investment Opportunities for Article 50.

In addition to our Best of British Fund Managers list, which highlights the 25 funds that have consistently performed over the past decade, we focused on some key topic areas: Disruption, European Recovery, Global Income, Small Caps, Contrarian and Sustainability.

Sector opportunity #1: Disruption

Politics are certainly disrupting the status quo around the world right now, but the wider theme of disruption is having a more profound impact on every aspect of our lives. Central to this is technology; a constant driver of new, and often simplified, ways in which we live.  According to a recent poll we conducted on our dedicated Article 50 hub, 57% of the 324 respondents believe that Britain has the ability to stand alone as a hub of innovation.

Sector opportunity #2: European recovery

65% of people who responded to a recent TD poll believed Europe has been wounded by the populist movement. However, I think the European economy is actually on a positive road to recovery with a selection of investment opportunities. What we’ve learnt from Brexit is that no one knows how key political events are going to turn out, and what the stock markets’ reaction to those events will be. As investors, it is better to stick to what you do know and focus on a long-term investment horizon.

Sector opportunity #3: Global Income

Article 50 has been triggered, but does that mean we should start looking abroad for investment opportunities? In another one of our surveys, 57% of respondents agree with my belief that independent trade deals between Britain and other areas around the world are highly likely – therefore, looking beyond our own shores, there are a number opportunities from around the world.

Sector opportunity #4: Small Cap Recovery

The quicker a company can grow its earnings in a sustainable way the more attractive it is to investors. UK smaller company shares have delivered better total returns than larger companies over more than 60 years.  You can think of small-cap investing in the same way as parenting. When the companies are at a very early stage, they are problematic. Likewise, any parent will tell you the ‘terrible twos’ is a difficult time. And once companies get too big, they are then teenagers, becoming potentially hard to manage. But in between these two phases is potentially a sweet-spot for parents and investors alike.

Sector opportunity #5: Sustainability

With events such as the UK’s vote to leave the European Union taking centre stage and leading to market uncertainty and volatility, it is worth noting there are still long-term, structural themes which can benefit investors. Sustainability is one such theme. It is becoming ever more important not just because of its significance in environmental terms, but because companies which adopt a sustainable business model are also outperforming those which don’t.

Sector opportunity #6: Contrarian

Sometimes opportunities arise in the basic act of going against the prevailing sentiment – when a fund is unloved or has, let’s say been out of fashion.

Other opportunities: Best of British Fund Managers

A lot has happened in the markets over the last 10 years; the global financial crisis, the price of Brent crude oil falling to its lowest point since 2003, and more recently the EU referendum and the drop in sterling.

Despite the volatile market conditions - and headlines – some fund managers have truly earned their stripes. Our Best of British research, now in its third year, identifies the top 25 UK fund managers who have consistently outperformed their benchmark and sector average over the last decade.

There is some crossover between Britain’s Top 25 fund managers and the above categories, including MFM Slater, Royal London UK Equity Income and Kames Ethical Equity, who would all appear in both lists - double the credit for their potential.

JLT Specialty, the specialist insurance broker and risk consultant, saw a 60% increase in the number of insured deals during 2016 compared to 2015 globally. This type of Mergers and Acquisitions (M&A) insurance, also known as Warranty and Indemnity (W&I) insurance - of which the real estate and private equity sector remain the key beneficiaries of - is designed to pay out if a buyer discovers the business bought is not what the seller advised it would be.

In its annual M&A Insurance Index report, JLT found that the average limit of insurance (as a percentage of the enterprise value) increased by 16% in 2016 compared to the previous year. This equates to an average insured amount of 29% of the total deal value for global transactions outside of the US.

This may be a reaction to perceived heightened investment risk driven by economic uncertainty around the Brexit negotiations, but equally it may reflect the ever-falling premium rates, as today it is possible to get more protection for less premium. Levels of cover in the US were lower at 23% of deal value, but Japan and Singapore saw the highest levels of protection at 30% and 34% respectively.

Overall market capacity has increased, largely due to new insurer entrants. Existing insurers and managing general agents are also significantly increasing their individual line sizes with a number now able to deploy $US100m+ per deal, allowing high limits of insurance to be met by a single or small number, of insurers. This has advantages from an execution risk perspective, as well as potential benefits in the event of a claim.

The real estate sector continues to be one of the main users of M&A insurance. Alongside this, private equity deals still represent a majority of insured transactions, with industrial and retail markets becoming increasingly frequent users. In what is becoming common practice across numerous business sectors, the seller often facilitates the use of insurance very early on in the deal process to optimise its exit from the transaction.

Furthermore, JLT found that whilst the seller commences the insurance process 40% of the time, it is the buyer that is the insured party on 93% of deals. This reflects a strong seller marketplace where selling parties have been able to negotiate reduced liability under the sale agreement and offer a W&I insurance policy to the buyer instead.

Ben Crabtree, Partner, Mergers and Acquisitions, JLT Specialty, said: “The events of 2016 in the UK and Europe have served as a test of maturity for the M&A insurance market, which perhaps surprisingly, has continued to soften further, both in terms of premium rates and policy retention levels, compared to 2015. This underlines the fact that competition between insurers remains at unprecedented levels. However, the market may harden a little if the current increase in claims activity we’re seeing continues.”

(Source: JLT Specialty)

Article 50 has been triggered, Brexit has well and truly begun. While the European Chief Negotiator for Brexit, Michael Barnier, would like negotiations to be completed within 18 months, the market characterised by economic and political uncertainty looks set to continue long into the future. So how should businesses behave? Michael Gould, CTO and Founder of Anaplan, sets out a five point guide to making the most of your business in such scenarios.

With all this in mind, businesses need to ensure that they are prepared for every eventuality. We’ve already seen shifts in exchange rates and with knock on effects such as price rises and likely regulatory and even workforce changes, there are a host of factors which businesses should already have on their agenda as having the potential to impact their organisations. With Brexit now in full swing, here are my top five tips for wrestling business success from the jaws of economic uncertainty.

1. Stop Waiting

With so many politicians, academics and economists each throwing in their two cents on Brexit it can be hard find any clarity around the real outcomes of Brexit. A recent survey by the Bank of England has shown a modest pick-up in UK investment, but businesses are still holding off on some longer-term investment due to a lack of visibility around future trading relationships. Whilst it’s tempting to hold fire on any serious decisions and adopt a ‘wait and see approach’, it could result in falling behind competitors and losing market share.

Staggeringly, our research revealed that two-fifths of businesses are yet to begin planning for Brexit. Avoid having to play catch up: take the time to gain an understanding of all the potential outcomes of Brexit and start from there. For example, businesses could use planning tools to simulate the impact of fluctuating exchange rates, or plan for potential scenarios on trade deals and tariffs. Another option is to explore different models of economic growth. A sensitivity analysis can then be run based on these projections, with the aim of mitigating risk and helping to plan for making the most of any opportunities.

2. Spot the opportunity

There’s no denying that the Brexit vote has brought an unprecedented level of uncertainty to the UK’s economy, but there are some forward-thinking businesses that have seen change as an opportunity to gain a competitive advantage, and adapt their services for changing consumer requirements. In fact, our research shows nearly one in three (29%) business decision makers say that the choice to leave the EU has already positively impacted their organisation. These uncertain times can be a chance to drive operational improvements or increased revenues.

The key is to identify the opportunities early. Once you understand where the openings are, success will emanate from effective planning. This means having a real-time view of the business and the market as a whole, and being able to react quickly to the slightest change. A good mix of teamwork and the right technology are vital here.

3. Take Control

To begin with, the success or failure of this transition will come down to the quality of leadership. Informed and confident business leaders will help engender a more positive attitude across the organisation. Our research found that many employees (40%) believe that knowledge and guidance should come from the CEO. But there’s a lack of faith: only 20% of respondents actually trust their leaders to provide this expertise. An effective leader inspires in times of change and uncertainty. Those at the helm of the organisation must seize the moment, take control of the situation, and crucially, be seen to be doing so by their employees.

4. Collaborate

Strong leadership from the top is vital for any business strategy, but collaboration throughout the planning cycle is just as important. Involving employees from different teams, disciplines and levels across the organisation will bring new ideas to the table, ensure everyone is bought into the strategy, and deliver a more robust approach moving forward. In uncertain times employees will value open communication and inclusiveness even more.

5. Adopt a Data-Driven Approach

While strong leadership and collaboration are both crucial to business success, companies must have the correct tools in place to take action, or they will struggle to adapt. With this in mind, it is surprising to see that so many British businesses are still relying on technologies that were developed over 30 years ago to plan in today’s market: pen and paper (58%), email (81%), Excel (86%) and Word (80%), to name a few. They simply are not fit for purpose anymore.

The data that a business produces has to be seen as one of its most valued assets. Organisations need to take full advantage of it and use the insight to make the most relevant and informed decisions. In such a volatile market, real-time data is invaluable. For instance, managers can use their company’s data to accurately simulate the potential outcomes of any decision, and forecast the possible impact.

Unfortunately, there isn’t a step-by-step guide or a defined roadmap for what the world will look like post-Brexit. However, businesses can make sure that they are ready for every outcome, modelling and planning for all possible futures. Organisational and cultural factors will play their part in ensuring that businesses are making the most informed decisions. But, those that also take a data-driven approach with the latest technologies will be a step ahead, and ready to take advantage of every opportunity in a dynamic and shifting economic market.

Financial passporting enables businesses across the EU to operate throughout member states without needing specific authorization for each country they trade in or provide cross border services within. Craig James, CEO of Neopay, explains to Finance Monthly that the EU stands to lose if financial passporting is revoked, and how a deal could be the best outcome.

Since the country voted for Brexit in June last year, there has been uncertainty about what the future holds, both for Britain and the EU. But, with Article 50 expected to be triggered anytime now, the next 24 months will be dominated by negotiations between the UK Government and the remaining 27 EU nations.

A major sticking point will be the role the City of London continues to play in the financial world in Brexit Britain – particularly when it comes to e-money and passporting. It goes without saying that the UK is considered the financial hub of Europe – most nations looking to do deals across the EU use London as a means of access – not to mention that as one of the world’s largest economies, our financial sector plays a big role in the rest of the world.

No matter what happens, or what deals are put on the table in the next two years, what is essential is that the Government recognises how important the UK’s ability to passport to the rest of the EU is to the wider economy – £27 billion in annual revenue according to Oliver Wyman.

The benefits of passporting for businesses and the economy are obvious.

Through the regime, firms can operate across the European Economic Area (EEA) with a single licence, from one jurisdiction, as long as the regulator is informed by the firm of their intention to use the licence to passport.

Whether Britain remains a member of the European single market could be a determining factor as to whether the country can remain a hub for passporting across the EU bloc, as being a member is a requirement for accessing the benefits this process brings.

If the UK withdraws from the single market, which the Prime Minister has indicated will likely be the case, it will signal the end of the established passporting regime, and could result in a US style arrangement where firms are required to register in each individual state.

However, while this would be a cause for concern in the UK economy, it could be a much bigger problem for the rest of the EU. As the fifth largest economy in the world, Britain will remain a nation that most e-money and payment businesses will want access to.

One of the reasons the UK is a preferred destination for firms looking to passport financial services is that the Financial Conduct Authority (FCA) has made it simpler for this to happen in the UK compared to the rest of the EU. This is not to mention that once the UK is free to make its own decisions on trade and regulations, it will have the ability to make itself an even more attractive prospect for firms.

The UK is also considered a pathway to the rest of the world outside of the EU, significantly including the US, so would likely remain a central destination for firms looking for efficient passporting.

On the other side, the EU would be required to establish a new finance hub. Some reports have suggested Luxembourg or Frankfurt could be gearing up for this role, but neither has the regulatory convenience of the UK and are far behind in developing these arrangements. That leaves the option of registration in individual nations, which again, increases the bureaucracy and is a convoluted and cumbersome regime for a fast-moving and technologically-developed market.

Considering that simply setting up a bank account in a foreign jurisdiction is already problematic and will cause significant delays, it will remain in the EU’s general interest to retain the status quo and allow the UK to remain the passporting destination for the wider union.

To highlight this point further, a Freedom of Information (FOI) request we filed with the FCA has revealed that as many as 75% of new payment firms authorised in the UK in the last eight years, including many from the US and outside the EU, have used the passporting regime to export their services. This is significantly higher than the number of firms looking to enter the UK from Europe and suggests the EU stands to lose out more than the UK if a deal is not reached to retain the current passporting regime.

Questions also need to be asked about the future of e-money and financial services with regards to passporting, especially in the area of expanding the market beyond the borders of the EU.

As a single entity, the UK would arguably be in a better position to negotiate deals with other nations to expand passporting rights. This would be an attractive prospect as emerging markets in the Middle East continue to grow.

While it could be argued that the UK’s financial market could be in a better position post-Brexit than the EU if passporting rights are revoked, it makes more sense for those involved to compromise on this issue above others.

No matter what the future outside of the EU looks like, or the EU’s without the world’s fifth largest economy on board, it is essential businesses can retain the ability to operate across borders as efficiently as possible, and retaining the one licence agreement is the best way to ensure that. Failing to establish this primary principle could lead to long term unrest and a detrimental business environment far beyond the two year negotiations ahead of us.

Following last week’s initiation of the Brexit process via the triggering of Article 50 of the Lisbon Treaty, Finance Monthly hears from Chief Market Analyst of Currencies, Jonathan Watson, who portrays a watchful outlook on the months to come, and how the tide can easily turn in the face of socio-political tiptoeing.

This week the triggering of Article 50 marks an important phase in the Brexit process. It is the beginning of the legal process by which the UK will leave the EU, signalling an end to months of uncertainty as to whether Brexit will happen. It is also the beginning of a whole new set of questions relating to the Brexit and how it will impact both the UK and the EU. From a currency perspective, I believe the Pound will have further to fall as the reality of some tough negotiations ahead weigh more on the UK. Nevertheless, Theresa May’s steely determination and clear vision has won her lots of support and indeed helped Sterling back from the brink earlier this year. Whilst I wonder whether such tenacity will be enough for such a monumental task ahead, I am also reminded that recent events have so often proved the more literal analysis of many of the negatives of Brexit have been proved wrong so far. It is still early days but it is in everyone’s interest to make this work and to remain hopeful for the future.

The UK economy is performing significantly better than feared which is extremely encouraging for the future. The weaker Pound has driven growth in firms who export as the discounted UK represents a good investment. However, the weaker Pound has pushed up import prices and costs across the UK from supermarkets to manufacturers, which is gently being absorbed into the wider economy.

The falling Pound has also led to a rise in Inflation which paradoxically, has seen Sterling higher as Bank of England policymakers debate whether or not to raise interest rates. Therefore, fears over higher inflation may not be such a problem, as rising interest rates may help the UK avoid any of the negatives associated with high inflation. Once Article 50 is triggered I can see Sterling falling as the complexity of negotiations becomes apparent. Nothing will happen quickly, already it has been made clear that the ‘Brexit bill’ must be agreed before negotiations commence. Trying to get all 27 members to agree one coherent position will also hinder time frames. France and Germany will also have elections to contend with this year.

These roundabouts and diversions on the path to Brexit will make life very difficult for Theresa May and the UK Government. All of this can very easily be seen to be damaging for the UK economy and Sterling. A lower Sterling is generally not a good thing for the UK as since we are a net importer (we import more form overseas than we export) a weaker Pound makes life more expensive for the UK as a whole.

However, I cannot help but be troubled by some of the looming questions and uncertainties arising from Brexit. A falling out with your biggest trading partner is never going to be completely without risk and the unpicking of some deep rooted social, political and economic ties is not good for business and confidence.

Whilst the resilience and flexibility of the UK economy coupled with Theresa May’s vision is gently receiving the backing of financial market, things can change very quickly. This leads me to suspect that whilst perhaps the worst fears will continue to be abated, longer term there could be greater challenges ahead which will harm the UK economy until we have clarity and certainty.

Business and consumer activity thrives when there is confidence and certainty, Brexit represents a massive change in the status quo which goes against what we know from a fundamental view.

Like it or loathe it, Brexit is happening and we must all come together and embrace it to make the very best of it. Business should be looking to make the most of Britain’s new place in the world but also remain cautious and plan for troubles ahead.