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Inflation and interest rates a greater concern than Brexit

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13/11/2017
Investors see rising inflation and low interest rates as a greater threat to their wealth than Brexit, according to a survey from Rathbone Investment Management.

While 42% of investors surveyed considered the prospect of rising inflation or low interest rates as major threats, just 30% saw Brexit as a significant obstacle to building and maintaining wealth. This neglects the relationship between Brexit and inflation.

The spectre of mounting inflation has raised concern for many investors – particularly those who hold a substantial amount of wealth in cash. Of those surveyed, just over a quarter (26%) said they had already been negatively affected by the rising rate of inflation and a further one in five (21%) were concerned that it would impact them in the near future.

At the same time, 69% of investors surveyed claimed not to consider Brexit as a substantial threat to their finances, in spite of several economic bodies predicting that Brexit will have a negative effect on the UK economy and consumer finances.

However, Brexit and inflation/interest rates are inter-linked. The devaluation of sterling linked to Brexit has contributed to today’s high inflation figures. It also contributed to the fall in interest rates from 0.5% to 0.25%. As such, it suggests that many do not recognise the knock-on effects of Brexit.

Robert Szechenyi, investment director at Rathbones, said: “Brexit has dominated the political and economic agenda for the last year, and with negotiations starting to heat up, that’s unlikely to change any time soon. But in this climate of heightened uncertainty, it’s encouraging to see investors appreciate that there need not be a ‘bad’ Brexit scenario as far as their investments are concerned.

“So long as investors are vigilant and prepared to adapt and make sure their investment portfolio is diversified, they should be able to make positive investment choices which mitigate both the risks of Brexit and inflation.”

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