The Share Centre’s chief executive says investors have had much to cheer since the UK voted to leave the European Union and will be “disappointed” at this week’s High Court ruling that threatens to stall Brexit.
The Government has already confirmed it will appeal the ruling in the Supreme Court.
SCM co-founder Gina Miller led the court case and urged the Government to accept the result, arguing it was about “process, not politics”.
Treasury select committee MP Andrew Tyrie has welcomed the decision saying it will limit the economic damage of Brexit by producing broad-based public consent about the UK’s future relationship with the UK.
But the Share Centre’s Richard Stone argues investors had been benefitting from the Brexit vote because it meant the Bank of England cut interest rates, thereby increasing asset prices. Sterling weakness had also boosted the FTSE.
“To that end, they will be disappointed by the High Court ruling on the triggering of Article 50 as it is likely to lead to increased delays, uncertainty and market volatility.
“Indeed Sterling has risen sharply and share prices have fallen following the judgement.”
The pound rallied against the dollar to $1.25 over the day.
However, while the FTSE 100 ended the day down, many domestically-focussed stocks benefited from the High Court ruling with RBS up around 6 per cent, Dixon’s Carphone up 4 per cent and Marks & Spencer rising over 3 per cent.
Stone concedes accepting the result of the ruling, rather than creating a protracted legal battle, may be the quickest way forward for the Government, which is what investors want.
“Anything which can be done to expedite the process of leaving the EU over the next two and a half years, accelerate trade negotiations, boost the UK economy and encourage investment will be welcomed.
“On the contrary, hurdles erected to delay that process and anything adding to uncertainty and market volatility will be a concern and will negatively impact investor sentiment.”
Stone says the Share Centre would like to see a convening of Commonwealth nations where the UK can get on with establishing future trading relationships.
Hargreaves Lansdown analyst Laith Khalaf says the ruling had been a “reversal of fortunes” for UK focussed stocks.
“The High Court ruling will be seen as increasing the odds of a soft Brexit, and the reaction of domestic stock prices shows the market thinks that would be preferable for the UK economy.
“The judgement also gave the pound a shot in the arm, which has taken a toll on the big companies with international earnings that have done so well out of sterling’s recent decline.”