Investment - Articles - Brexit deal may not provide the funding boost schemes need

 Rob Price, Fixed Income Portfolio Manager at AXA Investment Managers says; While securing a deal should provide some positive implications for DB schemes, we don’t think it will be the major funding boost that many may be hoping for.

 The global macroeconomic environment that the BoE could find itself in should a deal be struck is very different to that of 2016, with most main central banks biased towards an easing tilt which should keep UK interest rates lower than historical norms. This could limit any potential major funding boost that could be experienced from interest rate reversion.

 In terms of impact on spreads, we could expect these to be driven lower over the medium term as a deal drives more positive sentiment and technicals towards UK GBP assets, adding to the already high demand from schemes focusing on cashflow delivery for fixed income and particularly sterling assets.