9:23 am, September 21, 2016
I HOPE you have all been keeping a keen eye on the post-Brexit vote situation.
Since June’s referendum result, things haven’t really changed that much as far as consumers on the streets are concerned, although a lot of things happened during the month of June itself. For example, we saw the pound plummet and we saw both the FTSE 100 and FTSE 250 fall off a cliff, but none of this lasted too long.
Recently, we saw that GfK’s long-running Consumer Confidence Index had risen by five points. In August, all five measures used to calculate the index actually saw increases. It appears that consumers have settled into a wait-and-see reality of a post-Brexit, pre-exit UK.
Interestingly, this has turned into an uplift in consumer confidence. This is because of a number of economic factors, including low interest rates, high levels of employment and falling prices.
Let us discuss the pound. The pre-Brexit exchange rate was €1.30 to £1. This dropped to a low point of €1.15 following the referendum on June 23.
It was fuelled by a number of negative comments from Mark Carney, the governor of the Bank of England, and also the fact that the monetary policy committee reduced the base rate to a record low of 0.25 per cent.
This move, in my opinion, was made too early – just as we had started to gain momentum, reaching €1.19. In the following two weeks it led to the pound dropping €0.04 against the euro to €1.15 once again – as I say, our lowest point in this whole situation.
As I write this, we are back to €1.18 to the pound, which isn’t that bad, but it does make me wonder where we would be if we hadn’t had interference from the Bank of England?
The FTSE 100 drop was quite a significant one following the Brexit result, with about £100 million being wiped off the values of our leading companies in just two days.
It dropped to a low of 5,982, but was quick to bounce back fairly shortly afterwards.
In fact, it has been as high as 6,941 and, as I write this, stands at 6,842. This is about 600 points up on pre-EU referendum levels.
The FTSE 250, which is seen as a key indicator of the health of the economy, took just one month to almost completely eradicate the losses it sustained in the immediate aftermath of the referendum.
The FTSE 250 includes household names such as Auto Trader, Balfour Beatty and Debenhams, and closed a month later at 17,265.91 – just 0.2 per cent off its pre-Brexit levels. The FTSE 250 had dropped to lows of 14,967 and is now up to 18,193: a year high.
Things are by no means completely rosy in the long term, with the definite exit ahead and trade agreements still to be agreed across Europe.
However, in the short to medium term, the economy is stable and the outlook is great. We are Great Britain and one of the world’s greatest economies.
So if you were planning on cutting back your marketing budgets, cutting back on staff or even moving to Europe, think again!
Who is Ben Garside? Ben is marketing manager for First Response Finance. Call him on 07817 518739 or email [email protected]
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