One year on from the Brexit vote and business sentiment remains high

It’s been one year since the UK voted to leave the European Union and the dire warnings of economic catastrophe are still yet to emerge.

Businesses, which before the historic vote on 23 June 2016, were told a vote to leave would plunge the UK into immediate and deep recession have remained remarkably upbeat about the UK’s divorce from the EU.

Markets are up, purchasing manager’s indices continue to be positive, and business sentiment is strong. While the pound’s drop has certainly been the most measurable and sustained market movement since the vote to leave, it has found a floor and appears to be sticking to it.

Now negotiations have got underway the UK’s eventual relationship will become clearer over the coming weeks and months, with early indications the two sides are willing to compromise to reach agreement.

Despite UK prime minister Theresa May’s embarrassing general election performance she looks set to continue to steer the UK through Brexit and her weakened position could mean the UK is more inclined to bend before it breaks under EU demands.

The Index was flat today at 64.9.

Shilen Shah, Bond Strategist at Investec Wealth & Investment, said:

“On the 12-month anniversary of the Brexit referendum, market sentiment has clearly moved from initial panic to a degree of acceptance that the UK’s relationship with the EU is changing. The key uncertainty is what the actual relationship is likely to be, with the general election adding an additional layer of uncertainty given the clear soft Brexit bias in the Commons. Looking ahead it does seem like markets and central bank policy makers are operating in a period of high uncertainty, with the next move in both interest rates and bonds yields likely to be highly dependent on an opaque political backdrop with the UK government not in full control of the process.”

Graham Bishop, Investment Director at Heartwood Investment Management said:

“Sterling’s devaluation in response to the shock UK referendum result has been the most significant market event in recent years. It has yet to materially recover from its post-referendum low and now remains vulnerable to even more political and economic uncertainty. However, this year’s General Election result seems, at least, to have mollified some of the UK Government’s hard Brexit rhetoric, which has shifted to being more pragmatic and conciliatory. Uncertain domestic politics, economic cloudiness and more ambiguities around Bank of England policy lead us to maintain an underweight allocation to UK assets.”

The latest monthly data used by the tracker has been mixed.

While UK sectors recorded increased activity in April, consumer confidence slipped.

Zoe Mills, retail analyst at GlobalData said:

Consumers predict their finances will worsen over the next six months, which has pulled down overall confidence in the UK’s future. This lack of confidence will continue as rising food prices stretch disposable incomes – primarily because consumers are increasingly concerned with food quality and unwilling to trade down, despite improvements from supermarkets on own-brand ranges.


Verdict has pulled together some key economic variables (including sector PMIs, FTSE indices, and currency movements) and combined it with GlobalData research in a weighted percentage.

The number, recalculated every day, is added to or subtracted from a pre-Brexit vote day base of 50.0. Any number above 50 implies positive business sentiment, any number below, suggests negative.

Questions about the calcuation, and suggestions on how it can be improved, to Verdict editor Billy Bambrough.

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