Greater Birmingham Chambers of Commerce
In the pursuit of efficiency, and given that it’s been a relatively quiet week on the Brexit-front, we’ve combined our usual duo of blog posts on the economy and politics into one.
Britain’s economy continued to perform steadily this week.
Yesterday saw the FTSE 100 react strongly to an OPEC agreement to cut oil output with the index clearing 6,900. The FTSE 250 also enjoyed a positive trajectory after a dip earlier in the week.
However, the Pound has not performed quite as strongly as last week; continuing to hover around the $1.3 mark but dipping below 1.16 € following a speech by Minouche Shafik, Deputy Governor at the Bank of England, that hinted at further monetary easing for the UK.
Pantheon Macroeconomics Economist, Samuel Tombs, reported this week that both business and consumer confidence in the UK are now back to pre-referendum levels. However, he also highlighted that the pick-up in consumer confidence looks fragile and that uncertainty and sterling’s depreciation will most likely prevent business confidence from rising much higher.
A report released this week by Standard and Poor also called for measured expectations as it suggested that the growth to UK exports as a result of the pound’s depreciation may not be as large as some had hoped. The report notes that the increase in exports caused by previous falls in the pound tended to be limited. It also pointed out that decreases in other areas linked to GDP, such as Foreign Direct Investment and consumer spending, meant that historically exports growth did not translate into a large GDP boost.
Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders, also discussed UK exports as he warned that access to the single market is integral to the success of the UK car industry as it makes exporting both easy and affordable.