Two wealth managers have painted a positive picture of the UK in the post-Brexit environment.
Brexit doomsters are beginning to sound like an “outdated stuck record”, said Guy Stephens, managing director at Rowan Dartington.
In a client note, which noted sunny weather and a weaker pound might have supported the UK tourism, he said economic statistics showed retail sales increased 1.4% in July on a month-on-month basis compared to forecasts of a between 0.1% and 0.2% increase.
In July, figures showed second quarter GDP growth of 0.6% rather than the expected 0.4%, though this only included data from the first six weeks of the quarter, he noted.
“I heard a Brexit analogy to the Y2K technology disaster last week – all talk with little substance. It is too early to say at the moment but so far, the UK economy is holding up very well.”
Purchasing managers indices have “plunged” recently, though Stephens said the indices are a sentiment indicator, not a measurement of actual demand and therefore prone to human behavioural bias.
St James’s Place, another UK wealth manager, noted that since the Bank of England announced measures to stimulate the UK economy at the beginning of August, the FTSE 100 Index has risen by almost 4%, and hit a 14-month high on Monday.
However, the benchmark return has been affected by stronger-than-expected inflation, “renewed concerns over the impact of Brexit”, and lower oil prices, said the firm, noting also that the ratings agency Moody’s has predicted that the UK economy will slow, but avoid recession as the shock of the Brexit vote recedes.
St James’s Place, in a Brexit article for clients called ‘Golden glow’, noted a Chartered Institute of Personnel and Development report that showed the proportion of employers expecting to increase staff over the next three months dropped from 40% ahead of the vote to 36% after it, with a significantly sharper fall among private sector firms.
“For now though, data released on Wednesday showed that the labour market was strong prior to the referendum and that the Leave vote doesn’t appear to have caused any immediate damage,” the firm said.
Meanwhile, more than a third of large European companies interviewed by Greenwich Associates expect the short-term impact of Brexit to be negative or very negative.
In its ‘The Post-Brexit Hangover’ report, Greenwich Associates said companies felt the long-term outlook was “even more worrying”, as 45% of Continental corporates believe Brexit will have a negative or very negative long-term impact, and almost 30% of their UK counterparts “share this pessimistic long-term view”.
Sentiment has shifted significantly to the negative since the UK referendum in June, said Greenwich.
The next GDP estimate is released on Friday and will include data for the full quarter which will be “interesting to dissect and will add more granular detail to the debate”, said Rowan Dartington’s Stephens.
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