Greater Birmingham Chambers of Commerce
This Week in Brexit: The Economy 22nd July
With a month now between us and the Referendum vote, it’s a good time to look at how the economy is faring:
Compared to last week, the pound closed on Thursday slightly down against both the dollar (1.32155) and the euro (1.19973) and remains significantly below its pre-referendum levels.
However, the fall in the value of the pound has been a boon for export businesses. Markit PMI data released this morning identifies that new export orders are at their highest level in two years.
FTSE 100 and 250
The 5.32% fall in Easyjet shares led a 29 point drop in the FTSE 100 on Thursday although the index is 5.6% higher than where it was last month following the referendum result. It is also slightly up compared to this point last Thursday.
The FTSE 250 climbed well this week as many European stocks saw healthy gains. The index is 0.15% improved than at close last Thursday, although it remains below pre-vote levels.
The Royal Institution of Chartered Surveyors again highlighted issues in the UK property market as they identified that nearly a third of chartered surveyors felt that the UK market was in the early stages of a downturn. Their survey also found that capital value and rent expectations are falling.
The Markit PMI statistics that were released on Friday morning have had a notable impact upon a number of economic measures, including the FTSE 100, FTSE 250, and the value of the pound. The Purchasing Manager’s Index showed a fall to 47.7 in July which is the lowest level since April in 2009. Any reading below 50 indicates an economic contraction.
It is far too early to determine the implications however the GBCC will be keeping a close eye on the markets and will keep its members informed of major developments. Given the Bank of England’s decision last week against lowering interest rates, it will be interesting to see how the pressure from this morning’s report affects the monetary policy committee’s thinking next month.
This Week at the Chambers 22nd July
As usual it’s been busy at the Chambers this week. My colleague Stephanie Wall, Senior Policy and Patron Adviser, spoke as a panellist at an event hosted at the Aston Centre for Europe entitled, "The implications of the EU referendum for regional economies - What next for economic development?” The five panellists who also included: Anneliese Dodds, MEP and member of the Economic and Monetary Affairs Committee, and Lee Hopley, Chief Economist, EEF, the Manufacturers’ Organisation, gave their take on what the future holds for regional economic development. While not all is doom and gloom, an uncertain and complex situation awaits ahead. There was a lively discussion with the audience who raised questions on a range of issues including activating Article 50, the future status of EU immigrants as well as how we proceed with future negotiations.
Yesterday Paul Faulkner, our Chief Executive, spoke at a Centre for Cities event discussing what should be expected from the WMCA Mayor in their first 100 days. In light of the Brexit vote, it’s now more important than ever that we come together as a region, and make the most of our assets. The WMCA, and especially the Mayor, will play an important role in this. At the Chamber we are also starting to consider how as a city-region, we can define our future and will be providing members with further information/communications on this shortly.
As ever, if the EU Referendum result has affected your business, we would really value hearing about your experience. Contact Henrietta Brealey, Director of Policy & Strategic Relationships, at H.Brealey@Birmingham-Chamber.com.
Elliot Mason is Policy and Patron Adviser at the Greater Birmingham Chambers of Commerce.