How Brexit has Impacted Small Business Investors

Brexit has, generally speaking, been good for micro-capped companies in the short term. However, input price inflation can have a negative effect on businesses

External Writer 10 April, 2017 | 9:32AM

Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Judith MacKenzie, Partner and manager of the Downing Strategic Investment Trust, examines how micro-businesses have been impacted by Brexit and the outlook for slower UK economic growth.

In the UK, Article 50 has been triggered, but as to how long Brexit will actually take? Two years? 10 years? It is anyone’s guess.  We remain aware of the macroeconomic backdrop but we are not constrained by it, nor do we structure portfolios around it in a top down fashion.

Brexit has, generally speaking, been good for micro-capped companies in the short term. The devaluation of sterling made one portfolio company, Red24, a cheap acquisition target, and our exporting companies can be more price competitive, on a like-for-like basis, than they were before. On the flip side, we have seen some input price inflation which can have a negative effect on businesses which cannot pass this through to their customers. We remain vigilant to this and we stress our own forecasts on companies for the impact of inflation.

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