It’s now been three weeks since Britain voted to leave the EU. Since then, many of the key political players have left the stage; David Cameron has resigned, Nigel Farage has stepped down and many leading Brexiteers have faded into the background. The pound has plummeted to a 31-year low and the stock markets have fallen, only to creep back up again. More quickly and painlessly than anyone expected, we have a new prime minister in place. Is it a case of ‘as you were, everyone’?
The way the markets have bounced back has been little short of remarkable. London-listed shares have already recouped their losses since the vote, and are on the up. The FTSE 100 recorded its best weekly performance since December 2011 and is now at its highest level since last August. Of course, given the drop in sterling, it is still underperforming in dollar and euro terms. That said, it seems those falls in the aftermath of the vote attracted opportunists convinced there was easy money to be made, which went some way towards reversing the initial panic. Investors have realised there is no imminent prospect of Article 50 being triggered, meaning the UK’s departure from the EU will not take place for months or even years. In the meantime, it’s business as usual.
Andrea Leadsom’s early and unexpected withdrawal from the Conservative leadership contest has given the markets a further boost. Our new Prime Minister’s insistence that we should not expect a general election before 2020 poured oil on troubled waters, while most experts see her as a byword for stability. “I expect to see confidence in UK PLC increase as Theresa May is installed,” says Islay Robinson, CEO of Enness Private Clients.
Experts remain upbeat about the outlook for the housing market as well. The Brexit shock came at a time when the stamp duty increase in April had already put the brakes on London house prices, meaning it was much more easily absorbed. As often happens after a period of upheaval, most people have emerged with a gritty British determination to return to normality, and press on with their plans.
Jeremy McGivern, founder of Mercury Homesearch, was particularly sanguine in his reaction to the result in the days following the referendum:
Right now, many buyers will delay their purchases, which is understandable. Indeed if you think there is a reasonable likelihood of London losing its status as the global financial centre then you should not act. However, if you believe that London will continue to be one of the dominant cities of the world, then now will prove to be a great time to buy…the key is to be very selective and wait for great opportunities. So you must ensure that you are in a position to act swiftly and have total market coverage so that you have first refusal on the best opportunities.
In our view, his analysis is absolutely sound. For more information, have a read of our top tips for taking advantage of current market conditions. If you have any further questions, please don’t hesitate to get in touch.