!2 Point Brexit Plan

Brexit – 2 months on. What has changed?

Who are the winners? Have there been any losers?

This article is for information only and no recommendation is being made or should be construed from the contents of the article. Always seek independent financial advice prior to taking any action.

It has been over 2 months now since the UK’s historic European Referendum. In the lead up to the vote, both sides were predicting disaster for the whole country if the vote didn’t go their own way.

The Bank of England and senior financial experts forecast economic doom and gloom if Brexit were to win. The Remain’ers campaigned that the bottom would fall out of the housing market, and UK businesses claimed leaving Europe would contribute to increased overheads and barriers to trade which could ultimately result in increased unemployment. The outlook didn’t look good.

So post referendum, what happened? Immediately following the result there were kneejerk reactions in some areas, especially on the stock market when the FTSE 250 Index plunged 14.2 per cent overnight. The pound also fell against the dollar to a 31-year low.

However, these events were short lived. After an initial slump in the first two trading days following the Brexit vote, the FTSE 100 regained its losses within a week and by the end of June it was its best level since August 2015. But there is a caveat – many companies on the index generate their revenue overseas, and so the fall in sterling boosted their earnings power.

Unfortunately for some, Sterling didn’t make the same recovery. The biggest losers here were the holiday makers from the UK heading to the continent on holiday – the low pound to euro exchange rate meant that the costs of many peoples holiday’s dramatically increased.

But it was not all bad news – the low rate aided the companies on the FTSE 100 who had large overseas earnings. Exporters saw a boost to their sales and profits as the pound fell against the dollar and euro, due to their goods being cheaper for overseas customers to buy.

To date, it would appear that Brexit has had a minimal impact on the housing market. The Bank of England’s regional agents survey found that there was only a slight dip in housing market activity after 23 June and that home buying transactions had so far proved to be more resilient than some had expected.

There are some areas of the country, London being the main culprit, where the housing market is weak with property prices cooling quite dramatically, but these trends were noticeable before the vote.

Last month’s cut in the Bank of England Interest Rate can only help boost the property market further. Record low mortgage rates have provided a boost to homebuyers. So is now the time to look at moving house or remortgaging your existing home? There are certainly some very good deals in the market if you want or need to move relatively soon, but predictions are that the Bank of England will cut interest rates again before the end of the year which could yield even better deals from some of the major lenders.

Overall it is still early days, and depending on the terms negotiated by the government on leaving Europe, it would appear the immediate impact of the Brexit shock has to date been muted – we, the British consumer, have carried on spending regardless. But that’s not to say there isn’t more to come.

At Prosperity IFA, as experts within the Financial sector, we closely follow the events and trends that could affect you and your financial situation so that we can offer you the most relevant and up to date advice and guidance.

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If you have any questions on anything in this article or would like to discuss your financial situation further, call one of our advisors on 01892 300 303.

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