This Saturday will be exactly two years since Britain voted to leave the European Union. Now with only 280 days until the official Brexit, we wanted to review what has happened since and what lies ahead.
Whilst still ‘in’, the uncertainty over Brexit has had huge implications for the UK economy.
The Pound faced multiple sell-offs, having fallen by 20 per cent from $1.50 to below $1.20 against the Dollar since the referendum. Sterling has since recovered but remains undervalued on a trade-weighted basis. Economists predict worse times lie ahead for the British currency when the true cost of Brexit hits the UK economy.
Equities have fared much better. The FTSE 100 is up by more than 30 per cent from its post-Brexit referendum nadir of 5,788.44. However, compared to the S&P 500, its US comparator, the FTSE has underperformed. The US index was up closer to 40 per cent across the same time period.
But the outlook is not so rosy for Britain.
The Bank of England (BoE) remains in wait-and-see mode on its monetary policy. The central bank is not convinced growth is robust enough to warrant an interest rate increase.
It is in stark contrast to the Federal Reserve with its plan for two more hikes by the end of 2018 in addition to the two introduced earlier this year. Meanwhile, the European Central Bank has also announced its plans to begin tightening its monetary policy.
The UK economy outlook remains unclear as it is still anyone’s guess as to what type of Brexit the country will go for. The Conservative Party is far from “strong and stable”, especially as the divorce date of 29 March 2019 is drawing near.