Richard Buxton, the British fund manager, has predicted the UK economy will be one of the strongest in the next few years thanks to a “Brexit bounce”.
The head of UK equities at Merian Global Investors has suggested Sajid Javid’s decision to quit as chancellor this week could also be good news, arguing his replacement — Rishi Sunak — looked set to cut taxes and increase spending, boosting the economy in the process.
Setting out a bullish defence of the British economy, Mr Buxton said the recently elected Conservative government and the UK’s exit from the EU would drive a revival of business and consumer confidence.
“I am incredibly upbeat about the UK economy,” said Mr Buxton. “I am a huge believer that there will be a Brexit bounce. Business confidence is going through the roof.”
Prime Minister Boris Johnson won the country’s December election with a “stonking majority” and took the UK out of the EU at the end of January. He pledged to end austerity and “level up” less-successful regions.
Mr Buxton said for the first time in years, the UK had a government with a plan, which was willing to borrow and spend to deliver growth. “The last time we had a government with a plan was probably Tony Blair’s first term,” he added.
Mr Buxton, who stepped down as the chief executive of Merian last year after leading a buyout of the fund house formerly known as Old Mutual Global Investors, also played down concerns about the deadline Mr Johnson has set of the end of the year to agree a trade deal with the EU.
He backed the short deadline, saying: “Putting a degree of time pressure on things is sensible.”
But Mr Buxton added that a full trade deal was unlikely to be signed off in time, saying the most likely outcome was that the UK and the EU would agree a framework for traded goods. He said he expected that over the coming years, the EU and the UK would work to agree various deals on a sector-by-sector basis.
“If they can do a sensible deal and then do a multiyear process by industry, there will be no negative impact [from Brexit],” he said.
Simon Gergel, chief investment officer for UK equities at Allianz Global Investors, struck a more cautious note. “We expect a small recovery but we don’t expect a boom,” he said.
Despite various surveys showing a rebound in business confidence since the election, the British economy stagnated during the final quarter of 2019, according to data released this month.
