When the FTSE100 fell close to 5,500 in February, we all said ‘Mr Bear is back’. On Tuesday the index hit a high for this year of 6,400, and we all wondered whether Mr Bear had done what I said he wouldn’t, and shuffled back to hibernation. But the truth is that shares have lately moved in parallel with the oil price, which has perked up partly for technical reasons including temporary curtailment of supply from Kuwait; and a major element of the FTSE recovery is in commodity stocks that had been wildly oversold. So we shouldn’t read any great swing of confidence into a market still 600 points down on a year ago. If, for example, you bought Rio Tinto on the strength of our Spectator Money tip in early March, you’re quids in by 15 per cent so far — but bearing in mind uncertainties ahead, from the Brexit vote to the rise of Trump, you might want to recall an old City adage: ‘Sell in May and go away.’
No more forecasts please
The most striking thing about the Treasury’s forecast of the impact of Brexit is the relative modesty of its claim that by 2030, assuming a UK-EU trade deal akin to the one negotiated by Canada, ‘our GDP would be 6.2 per cent lower’ while ‘families would be £4,300 worse off’. Since those quotes come from the foreword signed by George Osborne, many voters will distrust the whole document — in which case they might prefer the even more modest ‘worst case’ of a 2.2 per cent GDP hit by 2030 predicted by non-partisan think-tank Open Europe alongside what it calls ‘a far more realistic’ range of possible outcomes ‘between a 0.8 per cent permanent loss to GDP… and a 0.6 per cent permanent gain’. If we take a middle way through all these forecasts, the most likely outcome is a run of small annual falls in GDP, after a big jolt at the start.