Events moved swiftly; within hours David Cameron announced his resignation.
By July 16th the UK’s second female Prime Minister, Theresa May, was making headline news around the world as she moved into Downing Street. In her inaugural remarks, she made it clear that “Brexit means Brexit and we will make a success of it.”
Uncertainty prevails. The timetable for our withdrawal runs from the moment the Prime Minister invokes Article 50 of the Lisbon Treaty, and in the view of many experts, the ensuing process will take at least two years to accomplish, maybe longer. Present estimates as to when the starting gun will be fired give January 2017 as the most likely date.
The immediate aftermath
David Cameron had predicted during the referendum campaign that a vote to leave would precipitate ‘a DIY recession’. The fallout from the UK’s decision was swift and punishing for the economy: the pound fell to its lowest level against the dollar for over 30 years. The UK was stripped of it triple-A credit rating.
Not all doom and gloom
It’s still early days, but as the initial shock wears off, commentators are predicting that although Brexit will impact growth in the short term, the economy is in a better shape than it was in 2008 and should as a result avoid recession by the narrowest of margins.
The new Chancellor, Philip Hammond, has made it clear that he will no longer pursue the goal of reducing the deficit by 2020, meaning that many austerity measures look set to be relaxed in an effort to stimulate the economy.
The Governor of the Bank of England has given strong hints that interest rate cuts and stimulus measures could be applied if necessary to steady the economy. In a move that will bring cheer to personal customers, NatWest has confirmed that if negative interest rates were to be introduced they would not be applied to personal accounts.
On the stock markets, the FTSE 100, made up of many international blue chip companies has risen to an 11 month high, whilst the FTSE 250, which has a greater representation of UK companies, was a month after the vote just 1.6 per cent lower than it was on June 22nd.
Although a falling pound means the cost of imported goods will rise over the coming months, the flip side is that our exports will be cheaper abroad, and more tourists are expected to find the UK an attractive destination.
Property prices are widely predicted to fall in the coming months – good news for those currently struggling to make their first forays into property ownership. However, with the UK’s chronic housing shortage, especially in the provision of family homes, it’s hard to see any down turn lasting long.
Encouraging news has emerged from two important sectors, showing that the UK is still regarded as a sound economy by overseas investors. Following the vote, the Japanese corporate, SoftBank, was quick to announce its £24.3bn takeover of Britain’s biggest technology company, ARM Holdings. Pharmaceutical giant GlaxoSmithKline still considers that the UK remains “an attractive location” despite Brexit, and plans to invest £275m in expanding its UK manufacturing base.
Learning to live with uncertainty
None of us welcomes a period of uncertainty, but that’s where we find ourselves at present.
There’s much to feel positive about; we’re a world-class economy known for our trading skills, competitiveness, and our ability to deal effectively with obstacles and challenges.
Harking back to the motivational campaign launched by the British Government in the run-up to the Second World War, what we need to do now is “Keep Calm and Carry On”.
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