Economy, rates, currency, housing & jobs
It has been 4 months since the EU Referendum called a Brexit result. The landscape is forever changing and there is typically lots of projections in the media about how Brexit will impact your finances, and that of the country. Let’s take a look at what has actually happened in these 4 months.
Economy
Economists were predicting a certain economic downfall if Brexit came to light. However, so far, there has not been quite such a drastic impact as expected.
The UK services sector grew by 0.4% in July. In September, consumer confidence tracked by the Retail Price Index (RPI) was reported to be back to levels before the Referendum. Although, consumers decision to continue spending has eased by low inflation, higher wages and the low Bank of England (BoE) interest rates, it jumped six points in September, showing the largest monthly increase since June 2015.
Gross Domestic Product (GDP) also grew in the three months to June, by 0.7%, higher than estimated.
Confidence amongst business owners appears to be declining though. The Federation of Small Businesses (FSB) reported members were pessimistic about the future.
Investment reports from global investment banks show that there is still much concern about investing in the UK.
Interest rates
The BoE called to cut interest rates in August, down to the record low of 0.25%.
There is the possibility of another cut in November so let’s wait and see the decision.
The low interest rates is aimed to boost the economy by keeping consumers spending, which seems to be working on some level.
The pensions fund deficit is a growing problem though as bond yields have failed significantly and therefore reducing the income pension funds get from their investments.
Currency
The value of the UK pound has called dramatically since the Referendum, back to levels of 1985!
The decline accelerated on the announcement that the UK would begin formal Brexit measures by March 2017.
The pound has called about 18% against the dollar since the 23 June
The weak currency is accentuated by the low interest rates and the other measures the BoE have in place to stimulate economic growth.
House prices
House prices have remained reasonably stable through these post-Referendum months.
There was a slight rise in transactions in August compared to the year before, according to HMRC .
Demand seems to have picked up in September, according to the Royal Institution of Chartered Surveyors (RICS).
They reported the first increase in demand in 7 months.
However, the number of homes for sale is at a 30-year low so the stability of the house prices is a little bit of a false sense of security. This could be changing, as house prices rose 0.3% between August and September, compared to 0.6% between July and August, per figures by Nationwide.
Jobs
Unemployment rose to 1.66 million between June and August, a slight rise, although figures by ONS show that the unemployment rate is now 4.9%, compared to 5.4% a year ago.
A Markit/REC survey showed that permanent hiring in July dropped to pre-2009 recession levels.
There are mixed feelings about how Brexit could affect the UK job market. Some large corporations are already accelerating job cuts, where as others are continuing forward with their plans for UK growth.
We keep you updated on things that affect your finances
Dental & Medical Financial Services have been helping doctors and dentists with their finances for over 25 years. We have seen all peaks and troughs in the economy so know how to advise you. Please contact Darren to discuss your finances further.
Tel: 01403 780 770