Tracking Brexit – how referendum shock is affecting UK economy
LONDON, July 12 (Reuters) – Britain looks set for an economic slowdown and possibly a recession after voters decided to leave the European Union in a referendum on June 23.
Official data showing how the decision is affecting the economy will not be published until mid-August but there have already been some early signs of the impact.
Below is a summary of some signals of the Brexit effect on Britain’s economy.
SPORTS DIRECT :
The retailer said political uncertainty was likely to drag on consumer confidence. The firm looks set to take a hit when making stock purchases because it was not hedged against the sharp fall in the value of sterling against the dollar for this financial year or beyond.
MARKS & SPENCER :
M&S said consumer confidence weakened before the vote. It reported weaker-than-expected sales in the three months to July 2 but said it was too early to quantify the Brexit effect. It kept its guidance for the 2016-17 financial year.
The high-end retailer said sales growth at its department store chain slowed in the week to July 2.
Amazon said it has not seen a sales dip in Britain since the referendum and its plans for the UK had not changed. It announced 1,000 new jobs.
Britain’s second-biggest supermarket warned that talk of a recession could prove self-fulfilling.
Major investment banks including Goldman Sachs and JPMorgan said they would work to help London remain a top centre for international finance, and a big source of tax revenue for the government.
Banks and other financial firms employ more than 2 million people across Britain.
But JPMorgan CEO Jamie Dimon said the bank could move thousands of staff out of Britain if the country lost its automatic right to sell financial services to the EU.
Recruiting company SThree Plc said hiring managers, especially in the banking sector, put decisions on hold in the run-up to the EU referendum.
PROPERTY DEVELOPERS AND HOUSEBUILDERS
Several major investment firms have temporarily prevented investors taking money out of commercial real estate funds while others have slashed the value of the funds.
The Bank of England said the slump in transactions in the commercial real estate sector could tighten credit conditions for UK businesses because many companies use their real estate as collateral for loans.
The housebuilder said the market had steadied after some deal cancellations immediately after the referendum.
The business outlook darkened by the most in four years, according to a survey published on July 11 when there were also fresh signs of a fall in consumer spending and a slowing of economic economic activity in London.
Another survey, published on July 8, showed consumer morale suffered its biggest drop in more than five years after the referendum, echoing other signs of a hit to confidence since the vote.
A separate YouGov/CEBR measure of confidence among businesses also showed a sharp fall.
Barclaycard, which processes nearly half of Britain’s credit and debt card transactions, said spending grew by 2.1 percent in the week after the referendum, although discretionary spending in pubs and restaurants fell.
New car registrations fell in June for only the second time in more than four years, and the number of shoppers on the country’s high streets dropped 3.4 percent in the days following the shock vote to leave the EU.
The number of people visiting British shops fell 3.4 percent in the 10 days following the referendum, according to retail data company Springboard. It said the initial shock of the Brexit vote had put people off shopping.
Accountants BDO said retail sales spiralled lower through June in the run-up to the vote.
Recruiter PageGroup said its second-quarter UK gross profit in constant currency fell by 2.3 percent in the three months to June 30 as firms held off filling jobs in the run up to the referendum.
A survey from the Recruitment and Employment Confederation showed the number of permanent staff hired via recruitment firms in June fell for the first time since December 2012 – around the last time Britain’s economy flirted with recession. The survey was conducted between June 13 and 24.