So it’s finally come to this. Three-and-a-half years of tiptoeing over future trade arrangements have yielded very little and a no-deal Brexit in just 20 days is a strong possibility. UK share prices have slumped in Friday business as a result. Sterling has also slipped to multi-week lows against other major currencies.
There’s still time to avoid the cliff edge, of course. But it’s clear UK share investors need to be prepared for the worst. The Office for National Statistics reckons a no-deal scenario will lop an extra 2% off a British economy, already ravaged by the effects of Covid-19, next year. The European Commission reckons GDP on these shores will fall by as much as 3% by the end of 2022 under this scenario. Trading on WTO rules poses significant disruption to economic growth over the longer term too.
A top UK share on my watchlist
UK share markets could be in for a bumpy ride in 2021. But it doesn’t mean investors should run for the hills. There are still plenty of stocks out there that will deliver brilliant shareholder returns in the near term and beyond.
I continued to invest in my Stocks and Shares ISA this year despite the crashing global economy. I wasn’t put off by Covid-19 and I won’t be deterred by Brexit issues either. Let me talk you through a top UK share I think will thrive whatever happens. National Grid (LSE: NG).
Powering up your shares portfolio
The threat of cross-border supply disruptions and weak consumer spending is something UK share investors need to be prepared for. They can seek relief from these problems by buying utilities companies. Demand for their essential services will remain stable, whatever happens in terms of Brexit.
National Grid is a perfect FTSE 100 stock for a cliff-edge withdrawal from the European Union, then. This is because it has a monopoly on keeping Britain’s power grid up and running. It doesn’t face competitive pressures such as British Gas owner Centrica, a company which could suffer a fresh customer exodus in 2021 as cash-strapped households look to cut costs.
Don’t think National Grid is just a great safety blanket in the event of a no-deal Brexit though. This is a UK share whose ongoing expansion programme should deliver excellent shareholder profits in the years ahead. Just last month, it affirmed plans to grow its asset base “at the upper end” of its target range of 5-7%. It plans to invest £5bn in this fiscal year alone to achieve these plans.
Today, National Grid trades on a price-to-earnings (P/E) ratio of 16 times for the 12 months to March 2021. I think this is great value, given the company’s robustness. A particularly in-demand quality in these uncertain times. Allied with its near-6% dividend yield, I think this UK share is a terrific buy for Stocks and Shares ISA investors like me.
