It is still clearly too early to predict the full repercussions of the vote to leave the EU. The events of the past couple of days have been seismic enough with the resignation of the Prime Minister, the prospect of another Scottish independence referendum and the disintegration of the Shadow Cabinet. There is no timetable for Brexit and there is speculation that a compromise deal may be sought or even that the Scottish Parliament could veto the whole thing. None of this is likely to be resolved quickly and there is a threat of UK recession. Some are even anticipating a structural rather than a cyclical downturn. We sincerely hope that these concerns are overdone but the current uncertainty does somewhat undermine our sector view of a benign economic backdrop. As a result, we retire our BUY recommendations on Speedy Hire and Northgate, given the historic cyclicality of both businesses. If we were to look for safer havens, we would highlight Restore and Vp, both of which we would expect to outperform peers.
