Brexit – one word amongst several that has come to define 2016. However many commentators and a significant number of institutions have been taken aback since June 24th at the lack of economic turmoil we have suffered.
It was universally accepted by the majority that we were we to leave the European Union the short and medium term prognosis for our Economy would be bleak. Growth figures were decimated, serious concerns for our stock market and more specifically our ability to trade with the wider world moving forward.
What has come to pass has been quite a surprise to many. Post Brexit we have seen growth figures amended for 2017 from 0.8% upwards to 1.4%. We have already seen 0.6% growth from July to September.
It is certain that sterling has significantly weakened post Brexit, falling from $1.46 pre-brexit to a level of $1.24 today.
In addition we have seen a similar surprise with the result of the US Presidential election in November. This is another substantial variable. Furthermore we have two European elections approaching in Holland and France, in March and April respectively. Both of which appear to be open as of today. Political instability across Europe and beyond will have a major effect on investor confidence as the year plays out.
Lastly we have seen inflation rise more recently in the UK. At a level of 0.5% in June it had risen to 1.2% by November and with the costs of importing goods & services rising, could creep higher in the short term. This coupled with interest rates of 0.25% could pose a serious conundrum for the Bank of England as 2017 plays out.
So, when considering many of the variables above there is one worth looking at, we haven’t yet invoked Article 50.
With Article 50 due to be invoked legally sometime in March, what short/medium term ramifications should we expect? Had the markets not yet priced in the certainty of our leaving the European Union? With all the legal wrangling since the vote, maybe this is a question we should continue to ask ourselves.