Uncharted Waters

13.12.16

Uncertainty about the long term is likely to weigh on UK economic growth in 2017, as Tom Hearnden of Edenhurst explains

We are now several months into a post-referendum world, and so far the UK economy is reasonably calm. Headline UK returns since the Brexit vote will have pleasantly surprised many investors. The UK remains a stable place to invest - however, having the correct mix of investments, as well as picking the right industry sectors and stocks, will be crucial. This state of economic calm will likely continue until there is clarification on the terms of the UK’s exit from the EU and potentially, the single market. However, as this could take two to three years, there are likely to be bursts of volatility along the way.
During this time, economic growth may slow, but we do not anticipate a recession. The latest survey-based leading indicators of economic activity appear to confirm this. Indeed, consumer confidence, and manufacturing and services order books, point to a period of stagnation similar to that experienced by the UK in 2011-12 when the Eurozone crisis was in full flux. They do not point to a contraction.
Meanwhile, the Bank of England (BoE) has issued a level of monetary stimulus appropriate for a serious deterioration in forward-looking data. The magnitude of this stimulus is likely to bolster economic confidence, which in turn will benefit assets prices. In a move that will be seen as a vote of confidence in Britain’s prospects after Brexit, Google has confirmed plans to build a new headquarters in London and create 3,000 jobs. The project, which involves building a vast headquarters next to Google’s existing base in King’s Cross, central London, was thrown into doubt by the EU referendum, among other things, but is now going ahead.

With the recent win for Donald Trump in the American elections and the fact that several European countries will shortly be experiencing their own elections, we appear to be heading towards a period of global uncertainty, not only in the political arena but also within financial markets as a whole.
During periods such as these, the need for professional and expert financial advice is becoming ever more important and indeed critical in order to preserve and enhance investors wealth.

Edenhurst Private Wealth has over 35 years combined experience in advising clients on modern wealth management services and can assist clients with a range of niche services, from the simple to the highly sophisticated, structuring, tax advisory and proactive financial management.

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