Wednesday, 24 August 2016

Brexit - 2 months on, the good and the bad

2 months on from that Friday morning where we all woke up to the news that Britain had voted out, we thought we would have a look and see how things are going.

It didn't matter which side of the argument you were, most didn't see it coming.

Some were devastated...

Others were over the moon...

Regardless of your pre-brexit opinion, the fact remains that the UK voted to leave. After the initial shock, most were left asking "what now?" or "what does that mean?". Nobody knew the answers. The immediate response was the pound plummeting against the dollar. But the FTSE after an initial free fall bounced back.

Since then we have had warnings of financial meltdowns, using words like armageddon, tsunami and apocalypse. We have yet to see any of those things happen, but the pound has remained very weak against the dollar. The FTSE however, has performed very well. Experts are saying the pound has bottomed out, gained some footing and may start to creep back up again.

As we came closer to the referendum date, we had Obama telling us he would stick us in the naughty corner and then at the back of the queue if we voted out. Since then we have had both Presidential candidates step well away from that and talk about the 'special relationship' and making it stronger.

The economy as a whole was expected to freefall, but the opposite has happened. With a new Prime Minister, optimism has returned. Retail sales were up 1.4% in July, which was much higher than expected. The IMF believe the UK will grow faster than Germany, France and Italy this year and next year. House prices, that were said to drop 18%, but they have stayed buoyant and are expected to do the same next year. One of the most pessimistic on house prices, Countrywide, have predicted only a 1% drop.

The Bank of England have been more cautious, Mark Carney gave a really great speech directly after the referendum telling us that every possible measure would be taken to keep the economy on a sound footing. Since then, we saw an interest cut to a record 0.25%. The BoE also said they would make available £100billion of cheap money available for banks to lend. Tey also said they would buy £60billion of government debt and £10billion of corporate bonds. A rate cut is good for borrowers, but bad for savers. Satander immediately cut the rate of their 123 account by half, from 3% to 1.5%, and other banks such as RBS are going to start charging major financial institutions to hold their cash...

On the whole though Britain has done what it always does, it has just gone on with it. As the very popular keep calm series shows, we haven't panicked we have just said right, let's get on with our lives and keep the economy and our country going. When we know what we can expect from Brexit, we'll deal with that too...

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