Don’t forget that Brexit hasn’t started yet and if we don’t have a deal that involves the EU setting our trade policy, an apparent red line for Johnson’s government, then it will go on for an estimated 5-15 years from the time it starts.
I have heard an alarming number of comments from people, people interviewed in the street, online and even politicians speaking as though Brexit is all over the day we leave.
Business knows that is the day it starts.
Some people apparently want to leave and never do business with Europe again! That is 50% of UK exports those people want to throw away just to show how much we hate the EU. 9% of exports for the EU. It doesn’t seem a realistic stance to me, although it could be self-fulfilling to a frighteningly large extent.
That delay impacts on LLOY, decreasingly one must assume as time goes on and we have deals with our major trading partners after, say, seven or eight years.
Looks like a long haul ahead and every likelihood of another extension followed by a general election according to most commentators, including Farage.
At some point things will settle out and the UK economy will adapt to the new reality with surviving and new businesses looking for business loans to invest and workers for mortgages as they move to the new jobs.
That will be coming from a low base and there may well be some pent up momentum that is unleashed, although it could be that most exporters that are affected have lost their market by then.
As LLOY look unlikely to go out of business, then it should be around to gain from that making LLOY a contrarian investment right now with a long term payback horizon.
OR, there is a small possibility that we end up remaining and LLOY catapults back very quickly.
However, I can’t see any outcome that satisfies all sides, which means continued uncertainty which will see less and less inward investment into the UK. So, if LLOY does catapult back then I will be selling rather than hanging around hoping a retail bank will operate well in an unsettled economy when history across multiple modern economies tells us that just isn’t likely to be the case.
Meantime I expect LLOY (and other banks) to keep laying off people with its biggest bottom line gains coming from cutting jobs and other costs like high street branches.