Cameron took several hours to fall on his sword but according to one report Hodgson’s departing speech was pre-written, before England had actually been knocked out of Euro 2016. It was certainly delivered suspiciously quickly after the match against Iceland. The referee was only halfway through blowing the final whistle at the time.
You could argue that Hodgson’s preparations for this eventuality were prudent, perhaps more so than the government’s preparations for a leave campaign victory.
Just as Hodgson did after the match, the markets stuck to the script on Friday and Monday. While few investment industry professionals or politicians predicted the leave vote’s win with any conviction, plenty of them correctly forecast the market reaction to such a result.
At some point relatively soon though, investors around the world will stop trading sterling and UK equities on panic and negative sentiment. They will begin to drill down into the nuts and bolts of what the decision means over the coming years.
We may be near that point already, as the FTSE 100 put back on 2.6% on Tuesday and the FTSE 250 3.6%. Sterling remained near its low point at $1.33 but certainly halted slide for the day at least.
There could easily be further days over the coming few weeks where big slides happen in minutes after negative headlines, but these will tell us little about the five or ten year prospects for the UK and its companies. This is what matters most to the majority of investors.
Those longer term prospects will in large part rest on the degree to which free trade will be preserved. An acrimonious relationship between the UK and EU countries with tariffs and other protectionist measures would indisputably have negative long term consequences for UK and European equities.
A series of bilateral trade deals being put in place between the UK and the larger EU nations such as Germany would be the obvious way to remove this as a major issue, although that is not possible with the EU in its present form. Whether the politicians on either side can make any trade deal a reality is far from certain at this point.
A weaker pound over the long run may be bad for holiday makers and people who get through a lot of petrol, but it is not necessarily so for UK equities. It will be a company by company matter, with exports benefiting from more competitive pricing and inputs to the supply chain that are imported costing more.
A case could be made that this presents a great opportunity for active equities managers to better demonstrate their value. Each company will be impacted by Brexit in its own way over the mid and long term, and stock pickers will be busy working out who the winners and losers are already.
