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ANALYSIS
NEWS
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THE INVESTOR
‘Brexit means Brexit’ has become one of the most-used slogans since the
June referendum, but it has not provided much illumination. Quite how, and
when, we will achieve the exit is no clearer now than after the vote.
Theresa May has said she will trigger Article 50 to start the two-year exit
process by the end of March 2017. But, despite her commitment at the
Conservative party conference that we would ‘have the freedom to make
our own decisions on a whole host of different matters’, there was little
clarity on what a post-Brexit UK would look like.
Initial economic fears have abated though, with many key indicators,
including consumer confidence, rebounding sharply after some initial
dislocation. But economists warn it is still too early to assess the long-term
implications. The Organisation for Economic Co-operation and Development
admitted that swift action by the Bank of England (BoE), including an interest
rate cut, had helped stabilise markets, but said: ‘Uncertainty remains extremely
high and risks are clearly on the downside…the UK is projected to grow by
1.8% in 2016 and 1% in 2017, well below the pace of recent years.’
The BoE, in its September Monetary Policy Summary, said it still expected
growth to slow in the second half of 2016, adding: ‘While most business
investment intentions surveys weakened further since the August Inflation
Report, the near-term outlook for the housing market is less negative than
expected. Overall, these data remain consistent with the Committee’s
judgement [in the report] that business spending would slow more sharply
than consumer spending in response to the uncertainty.’
1
However, there are some early indications of faltering consumer confidence.
Private registrations of new cars fell 0.2% in August,
2
while house sales
dipped between June and July
3
. But the UK’s stock markets quickly rebounded
from a post-Brexit slump. Sterling has recovered slightly against the dollar and
euro but it remains some way below pre-referendum levels
4
.
1
bankofengland.co.uk,September 2016
2
smmt.co.uk,September 2016
3
gov.uk,September 2016
4
bbc.co.uk,September 2016
ECONOMY
HEADING TO THE BREXIT DOOR
Quite how, andwhen,
wewill achieve the
exit is no clearer
now than after
the vote