Brexit: Three months on

Three months on from the UK public’s decision to leave the EU you could be forgiven for wondering what all the fuss was about. For the average man or woman on the street little, if anything, has changed and in truth isn’t likely to for some time. However, on a macro level there have been some significant developments since the referendum.


As I’m sure the more astute readers will have noticed, we have a new Prime Minister in Theresa May and with this a new cabinet. With many of the Brexiteer’s holding prominent roles, such as Boris Johnson as Foreign Secretary and Liam Fox as International Trade Secretary, these ‘lucky’ few will be responsible for negotiating the terms of Britain’s exit from the EU, and the events of the past three months would indicate many a sleepless night ahead for each of them.

The fact that last week we saw MPs disagreeing about when “Article 50” should even be enacted, triggering the two year time limit on our official exit from the EU, shows just how rocky the political road ahead will be. With 43 years of treaties and agreements spread over dozens of industries and countries needing to be unravelled and agreed by all of the 27 remaining nations within the EU, this will not be a speedy process.


 Initially it looked as though Brexit would trigger a sharp downturn in the prospects of investment markets, with the FTSE 100 index falling sharply within hours of opening on results day. However, since then there has been a remarkable rebound with the FTSE 100 returning nearly 11.5%* over the past three months.

Investors appear to have taken the view that the wheels of business will inevitably keep on turning, even if the terms of engagement are somewhat altered. This is a view we would be inclined to agree with and, as ever, maintaining a diversified investment portfolio is key to mitigating any volatile periods that lay ahead. Should there be a rush to withdraw capital from the UK or EU stock markets, investors will inevitably head further afield to US or Asian markets in a hunt for growth. As we have discussed in a previous blog, ensuring that investments are spread across as many sectors as possible will avoid any over reliance upon one single market.

Interest Rates

There was also a big decision made by the Bank of England back in August to drop the base interest rate to 0.25%, an all-time low for the UK. This was accompanied by hints of further reductions in the future if deemed necessary to stimulate economic growth and spending.

This has not been good news for savers, who are unlikely to see any improvement in the miniscule interest rates currently on offer through most savings accounts. However, for those looking to invest in their business, it is hoped that the rate drop will allow this to be done as cost effectively as possible.


The biggest change in their day to day lives that most people will have noticed is that their holiday money has cost them a bit more this year, as Sterling has fallen sharply since the 23rd June against most foreign currencies.

On a business level, this drop in the value of the pound has benefitted some companies, primarily those who sell their goods or services abroad, whilst others who import goods from overseas have felt the squeeze as each pound spent buys them less than it did three months ago. However, it is important to note that before the referendum, the pound had experienced a sustained period of strength over foreign currencies, particularly the US Dollar and Euro and the subsequent fall was not entirely unexpected. As negotiations with the EU commence in earnest over the coming months (and potentially years), it is highly likely that we will see further falls in the strength of the pound and business owners need to be prepared in analysing how this could affect their costs and revenues.

Life goes on and so does business

During the 95 days since the EU referendum there have been some significant political and economic changes that represent the start of a much longer and larger scale process. Ultimately, for the average man or woman in the street, we believe that the day to day is unlikely to change as we gradually shift to a new way of trading with our overseas partners.

UK businesses will still be keen to continue trading with their European and global partners who will in turn be eager to continue importing their well-established brands into the ever-lucrative UK consumer marketplace.

Over the next few years we will almost certainly see volatility within the investment and currency markets, as well as the usual political back and forth as all parties involved attempt to secure the best deal. However, we are entering unknown territory and as such attempting to second guess market movements is, as ever, a futile venture. More important is the need to ensure that you have a structured and thorough financial plan, removing any over reliance upon one source of income. This will ensure that no matter how things progress, you will still be able to achieve your own personal goals and ambitions. If you are looking to develop your own financial plan, please feel free to contact us and discuss the various ways in which we can help.



*Source: Morningstar (23/09/2016)

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