Brexit done, Covid-19 continues: What's next for the UK?

Rebuilding faith in domestic equities

The trade deal with the European Union removes some of the uncertainty facing the UK, even though the agreement is relatively "skeletal" and includes little to address the service sector. It closely resembles what was once considered a hard Brexit.

Moreover, the ongoing Covid-19 crisis and a third national lockdown will continue to depress the UK economy. However, following a year in which the UK's FTSE 100 index fell more than 14% - its worst performance since the financial crisis - the agreement with the EU removes one source of uncertainty that has weighed on the UK market since the Brexit referendum in 2016. While the deal is unlikely to transform sentiment towards the UK overnight, investors may begin to see buying opportunities in an equity market that is widely undervalued. Shot in the arm or a shot in the dark? Compla...