Ignoring Brexit for a moment lets look at some of the economic indicators in the UK:
- We still have record low interest rates in the UK, combined with continued low inflation (0.3% in March);
- Today it has been announced that unemployment figures have risen over the last quarter to 1.7 million;
- Increases in earnings have begun to slow over the same period down to 1.8% from 2.1% in the previous quarter; and
- UK property prices are around the same levels now as they were before the start of the global economic crisis (some commentators believe they have already begun to fall);
Of course, these are not all of the issues, just some of the headline ones and whilst none of this is catastrophic, it is clearly not a picture of health from an economic viewpoint. The vista is not much better if we look further afield than the UK either I'm afraid.
Our financial markets are performing much better, for now, but one wonders how long that can continue. I was listening to a leading investment manager over lunch yesterday, reflecting on how we are currently enjoying one of the longest bull markets in recent history, and that many analysts believe the markets are close to the top of that now with pessimism starting to creep in. An interesting fact I will share with you, of our FTSE 100 companies, 70-80% of their earnings come from outside the UK. So they are not a particularly good indicator of the wider UK economy anyway.
At this point I really must remove the cowl and put down the scythe, as I will be talking us into another recession, but I do think it is important to consider the impact of the upcoming referendum in light of our current economic climate. The one thing that economies and markets really do not like is uncertainty, and in the absence of any real plans being put forward by our politicians I am afraid that is what will result from a vote to leave, uncertainty...
