Much has been made of late about the relative calm following the Brexit vote, regarding the performance of stock-markets, Sterling and the economy. Helped, of course, by the political pantomime not being a drawn-out affair. Having a credible leader in place has certainly bolstered confidence in the short-term. Many commentators, however, appear to have overlooked how the uncertainty will affect business and consumer decisions.
Real economic data will begin to wash through in August and this will give us more clues about the immediate effects but the Purchasing Managers Index suggests the immediate future is not rosy. This is no surprise to us. It has dropped to a seven year low, lower than many forecasters expected. In effect, business activity has fallen at the fastest rate since the height of the financial crisis in 2008-09.
Following the published results, the pound fell but the FTSE 100 reversed back into positive territory. A lower currency helps certain companies whose main earnings are in other currencies.
Gary Neild
Chair of investment committee
