Sunday 2 June 2019
The UK economy has started 2019 impressively, with the manufacturing, construction and retail all posting significant growth, putting Britain on course for a 2% increase in output this year, the type of growth the Eurozone could only dream of. The persistent concern on the horizon for a range of actors is the uncertainty brought about by the delay to Brexit, raising the credentials for a WTO Brexit, which would usher in a fast-tracked and ambitious trade deal with the US, says Ambassador Woody Johnson.
According to the ONS, UK economic growth returned to half a percentage point in the first quarter of 2019, marking down the dismal end to 2018 (0.2%) as a one-off. British output is now on course to beat last year’s figure of 1.8% which, in spite of a weak final quarter, performed better than the three biggest economies in the Eurozone, France, Germany and Italy, as well as the EU as a whole. Encouragingly, the improved performance was not down to typical expansion in the dominant services sector, but construction (2.2%) and manufacturing (1.4%), the biggest rise in the sector since the 1980s.
Wealth advisers Tilney have compared the stability of stock markets worldwide and discovered that the MSCI United Kingdom All Cap index, which includes most of the stocks listed in Britain, has been the most stable of them all for the past three years. Tilney examined the average level of swing in share prices. Brazil ranked the lowest in the world. Britain’s global equities exposure places it on a strong and stable footing. Downing Street must be envious.
Retail sales are soaring as Brits are getting savvier with their spending, choosing to purchase more and more online. But they’re not only changing where they buy, they’re also splashing more cash (see graph below). Sales rose 1.8% over the three months to April, traditionally a weak period in the retail cycle. Web-based purchases increased a whopping 9.4%, the highest spike since records began three decades ago. The near 2% increase overall represented a 5.4% rise since the same period last year. According to Reuters, Brexit uncertainty brought about by Theresa May’s repeatedly rejected deal in the House of Commons provided a downward drag on sales over-ridden by ever-increasing employment and the improved buying power of shoppers across the country.
A staggering 81% of asset brokers are carrying on with their existing plans regardless of what happens with Brexit. The Broker Sentiment Poll by United Trust Bank surveyed 130 brokers – from land to equities and commodities – asking them to indicate the extent to which their customers were affected by uncertainty over Britain’s withdrawal from the European Union. Less than half of respondents thought their clients were being affected, only 9% of brokers themselves said they were putting their own plans on hold.
Office construction in Central London has expanded at the highest rate over the past year since the referendum, Deloitte’s crane survey has discovered. 3.5 million sq ft of office space has been scheduled for development over the last six months alone, 37 individual projects in all. Similarly, the London Development Barometer, a survey of development managers has uncovered rising confidence in investment. 64% of participants said they expect an increase over the next five years, or for the level to stay the same, a 51% hike on the last survey, six months ago.
“This is a far cry from the doom and gloom predicted when the UK voted to leave the European Union in 2016 and reinforces the City’s global pre-eminence as an investment destination.”
Increasing office space in the capital is just one sign of rising investment throughout the UK economy. The OECD recently revealed that the total value of foreign investment in the UK rose by 5% last year…
…However, if the Remainer tactic of kicking can down the road until a second referendum is held or Article 50 is revoked, Eurosceptics will get the economic stagnation they’ve perversely been hoping for. Bank of England deputy governor Ben Broadbent warns that the stasis caused by the political establishment is holding off investment. It “makes sense for firms to wait for news if they expect the news to come soon”, said Broadbent. “If you continually expect news to arrive imminently – a resolution – then that can have quite a depressing effect on investment.” Note, the Broker Sentiment poll found that 8% of brokers are pursuing conservative strategies due to Brexit uncertainty. Britain needs to leave the EU on October 31.
Investment in Britain’s tech industry jumped from £1.66bn to £1.89bn in 2018, an impressive 13% rise. Interestingly, the total value of deals involving at least one EU partner also rose, from £1.26bn to £1.53bn, however the US remains the largest single investor. Encouraging then that US Ambassador Woody Johnson has said the White House is looking to get a deal arranged as quickly as possible once Britain has left the EU (see tweet below).
A 🇬🇧🇺🇸 trade deal is on and it will be done "expeditiously", says Ambassador Woody Johnson.
"It's on the President's desk day one, the minute you leave… we're looking at all components and trying to get everything lined up so when the time comes, we're ready to go." pic.twitter.com/EFtAZAB7ix
— Leave.EU (@LeaveEUOfficial) June 2, 2019
The total value of homes sold in Scotland over the first three months of the year reached £3.4bn, the highest value since the financial crisis began in 2008. Sales are up £80m, 2.3% on last year. The average home in Scotland is now 8.6% higher than in 2016.
With the pound rising 3% against the Euro, European destinations have become more attractive, leading to a 167% rise in holiday bookings to the continent, a staggering six-fold increase since the referendum. “Europe’s proximity and familiarity has always given it an advantage over other travel destinations, but the pound’s rise against the Euro in 2019 has boosted the Eurozone’s appeal even further, says David Lamb,” a currency exchange expert.
Schroders index of 30 “global cities” has promoted London to second place, overtaking Hong Kong and ahead of New York, Los Angeles is in first place. The capital is the only European City in the top 15, with Paris well behind in 17th place. The ranking takes into account population, economic growth and disposable income.
“We remain upbeat about London’s prospects. London has unmatched attractions, from green spaces to a vibrant cultural and entertainment scene. People want to live and work there and that means London can attract the world’s most skilled employees,” said Hugo Machin, co-head of Global Real Estate Securities.