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The economic impact after one month

The overall impact of the referendum has so far, in the space of a month, been less severe than some of the more apocalyptic warnings had suggested, writes Nick Fletcher in the Observer. But there have been winners and losers across the economy.

  • Sterling went on a rollercoaster ride on referendum night, ending up down 8% against the dollar. Since then, its decline has continued and the pound is now at levels not seen since 1985.
  • A record $2 trillion was wiped off the value of global shares by the Leave result.
  • Since then, there has been a recovery, particularly for the FTSE 100, which has regained all lost ground and more. However, the FTSE 250, which is more exposed to the UK economy than the 100 index, has yet to reach its level of before the referendum result. Despite recovering more than 13 percent from its lows, it is now down 2% from its pre-poll level.
  • House prices are forecast to drop for the rest of the year, with a price correction of even 40-50 percent in the most expensive London boroughs.
  • Shares in housebuilders lost around 40% of their value in the immediate aftermath of the poll. There has been some recovery since then, but Barratt, Britain’s biggest housebuilder, is still down around 28%, and it has said it may build fewer homes because of the current uncertainty.
  • Funds invested in commercial property were forced to close their doors for a while, as panicked savers tried to withdraw their cash. They have now started to reopen, but investors who want to get their money out may take a hit as payments are adjusted downwards.
  • The banking sector has been hard hit by the Brexit fallout thanks to a combination of low interest rates, worries about future access to European financial markets and the prospect of a general downturn.
  • Estate agents have been the only businesses to issue profit warnings but airlines have said the uncertainty will hit demand and other travel companies are suffering. But the falling pound has been good for Heathrow Airport as international visitors spend more in its shops.

theguardian.com

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