Article last updated 30 September 2025.
Attorney General Geoffrey Cox issued a more favourable legal update on the amended Irish backstop deal, which could give wriggle room for Mrs May to persuade Northern Ireland’s Democratic Unionist Party (DUP) and the European Research Group (ERG) of hard Brexiteers that Britain could exit the deal down the line. Apparently certain members of the DUP and ERG are looking at this new opinion in a favourable light. We will wait and see.
The Prime Minister also got her amendment on the extension to Article 50 passed, setting the stage for a third run at passing her deal next week, which may just be possible with the Attorney General’s help. If the deal goes through, the extension brings us to June. If not the can will be kicked down the road, with the UK participating in the EU elections and paying into the budget. And let’s not forget that an extension is also reliant on all 27 members of the EU agreeing when they meet next Thursday, 21 March.
Where to from here?
An extension to Article 50 looks likely and it is still possible that Mrs May could get her deal passed next week. So the process edges forward amongst much confusion. Sterling was hovering around $1.32 Friday morning, so little changed.
Despite all the political shenanigans, it’s important to remember that Brexit is not a globally systemic event. It is not akin to the Global Financial Crisis of 2007-08 or the European debt crisis of 2011-12. Also, the typical UK investors is a global investor, with significant exposure to overseas revenues. For example, even if an investor only held companies listed on the UK’s FTSE 100 index, 70-80% of the revenues underlying your investment originate overseas.
It would also be wrong to completely write off the FTSE 250 and even AIM as ‘domestic UK exposure’ – there are plenty of good companies in these indices selling their products and services overseas. While there will be ups, downs and new rules to figure out, we believe good ideas and products find a way to make it to their customers, regardless of what governments throw in their way. In the longer term, we remain confident that investors will identify value in the UK market, especially once the uncertainty of the last couple of years is resolved.
As consistently highlighted in the series of updates on our Brexit decision tree, an extension (what we’ve dubbed the ‘never-ending story’) is likely to take pressure off UK assets in the short term, though it would prolong the uncertainty facing businesses and may continue to crimp business investment.
A softer Brexit would likely see upside for sterling and UK equities, and weigh on gilts.
Julian Chillingworth
Chief Investment Officer