Where are we now?14 September 2016
Now that some time has passed after the surprise Brexit vote, this is a question that many are asking. Maybe the question should be 'where are we for the time being?'.
There are many ways that the outcome thus far could be read; however, looking at this from a financial and economic perspective, we could note the following points (to name a few) as we enter autumn:
- Bank of England base interest rate down to 0.25% from 0.50%, with savings and deposit rates following promptly, with loan & mortgage cost reductions invariably lagging behind. Some anticipate that rates will fall further; however, with business confidence rising in August (Source: YouGov/Cebr Economic Index / August 2016), the need for an immediate further rate reduction may be reduced.
- Consumer Prices Index (CPI) rose by 0.60% in the year to July 2016, compared with a 0.50% rise in the year to June, announced in early August (Source: Office for National Statistics (ONS)), fuelled in part by higher import costs owing to a weaker Sterling. Big ticket sales continuing apace, car sales up, but food prices falling (Sources: Society for Motor Manufacturers and Traders and BRC Neilsen Shop Price Index).
- Sterling fell, but now recovering against the dollar, with exchange rates at just over $1.34 at the time of writing (07 September 2016).
- Unemployment falling further to 4.90% for the period April – June 2016, the lowest since July 2005 (Source: ONS).
- Canada Life being the first that we are aware of to relax its stance on its commercial property fund. The Canlife UK Property fund has been reopened, although a fair value adjustment will continue to apply to the portfolio. Retail property funds run by Standard Life Investments, Columbia Threadneedle, M&G, Henderson and Aviva Investors all remain suspended at the time of writing.
- The FTSE 100 index has risen significantly since the Brexit vote: the index was at 6338 at close of business on Thursday 23 June, the day of the vote, falling to 5982 at close on Monday 27 June, after the weekend. The FTSE has risen to 6,836 at the time of writing.
It is important to note, particularly at a time when we are moving into unknown territory, that past performance is not a guarantee of future performance and all of the points above can and will change over time.
More detail on these points and many other personal and business financial planning can be found in our latest newsletter which will be available later this month and if you would like a copy then please let us know.
Does this answer the question as to where we are now? No! However, it does provide a partial economic snapshot of what has happened so far and may affect your financial planning considerations as we approach the end of 2016.
And where next? There is much political posturing in the UK, particularly from an outward global perspective, but eyes will start to turn to America in the coming weeks as we approach the American Presidential election in November and its potential outcome. Will this weaken or strengthen the dollar as a world currency?
No individual advice is provided during the course of this blog. If you would like to consider your savings, investment and financial planning further then please contact us at either our Guildford or Woking offices.
Keith Churchouse FPFS
Chartered Financial Planner
CFP Chartered FCSI
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.