We have been speaking to some of our clients to find out what makes them tick, from their concerns, to recent successes, to planning for the future.
In a series of blogs, we’ll look at some of the issues which have come up time and time again.
Not a day goes by when we don’t hear something about Brexit, but has anyone really thought about how it might impact on their day-to-day lives?
The truth is, no one’s quite sure. As we hurtle towards June 2019, we spoke
to some of our clients about their expectations and tried to tackle some
of their questions.
Q. Will I be hit by rising inflation?
A. This depends on the fate of sterling, which has been struggling since the
EU referendum. If a so-called ‘hard-Brexit’ hits, it could cause a fall in the value of sterling, meaning inflation could remain high. As a result, wages may not rise in line with the average person’s costs, but there is hope. In February, wage growth outstripped inflation for the first time in a year.
Q. Will the value of the pound bounce back?
A. Although it’s unlikely we will see sterling plummet like we did in the aftermath of the referendum results, our experience is that businesses and investors remain wary. A hesitancy to invest, plus a recovering pound has had a direct impact on the average household, with the governor of the Bank of England suggesting incomes are £900 lower than pre-vote predictions. But a recent poll of foreign exchange strategists suggests the pound will bounce back in the next year, approaching pre-referendum levels once again.
Q. What will happen to the housing market?
A. We have seen a fall in consumer spending in recent months – just look at the number of causalities on the high street, and this is because many of us are feeling the squeeze on our pockets. We’re also shying away from large purchases, and this includes housing. The pace of growth for UK house prices has continued to slow, and in London, house prices have dropped on average £3,500, as demand from foreign buyers has fallen. Compared to this time last year, transactions are down by 5.4%. It is possible to benefit from the slowdown, however, as sellers will be willing to accept offers well under the asking price.
Q. Where should I invest my money?
A. It is best to get professional advice that will best match your circumstances, but as a general rule, firms that make most of their money abroad are doing well. Investors quickly realised that after the initial post-referendum panic, firms that made their money overseas would greatly benefit from the sharp decline
in sterling. This has led to a divide in the market, with shares in some international firms rising, while domestically-focused firms fared less well.
There’s only one year to go until we break away from the EU, and while much remains up in the air, things haven’t been as bad as some predicted. Our clients told us that while they remain cautious, they wouldn’t shy away from investments in the next year if it was well-advised.
If you’d like to find out more about how we can help you manage your assets and keep things simple, get in touch.