Investors in the UK stock market should be very pleased with the returns they earned in 2016. UK equities gained of 19 per cent last year, with the Footsie ending the year at an all-time high.
What’s not to like we hear you say if you are lucky enough to have money invested.
Well where’s it all going now? Is the upward trajectory going to continue in 2017? HopeforEurope has no financial expertise but will merely observe that
the market has slipped back – a series of high-profile profits warnings from companies including BT and Pearson during the second half of January prompted a change of fortune for investors.
The outlook for the UK stock market is uncertain to say the least. The Brexit vote resulted in a decline in the value of the pound to a three-decade low point.
That drop has boosted some British businesses with non UK-earnings, but many think that Brexit threatens to badly damage the UK economy – and the companies that depend on it.
One effect of the falling pound has been higher inflation – now up to 1.6 per cent and climbing – as import prices have increased. It would not be unexpected for this to reduce consumer spending,as rising prices squeeze people’s disposable incomes this year.
With the announcement from the May government that the Uk will leave the single market and the customs union, a failure to reach a deal on trade with the EU within the two years may well mean that British businesses forced to pay high tariffs to sell their goods and services inside the bloc.
A trade deal looks a tall order in the time allowed so what does this mean for the future of the British economy.
And by the way Europe’s largest management consultancy has warned against investing in Britain. Might be sour grapes .. might be indicative of the way things are going.