Notwithstanding the status of the medium-term economy, the Report comes after a period of many changes. Sterling prices reeled following the vote to leave the EU and the BoE responded with a liquidity scheme, base rate cut to 0.25%, further QE and a new funding-line for banks (Term Funding Scheme) – which is supposed to allow banks to pass on a rate cut to customers from the cheaper central bank lending and reassure the markets. Overseas investors had held back money after the vote and retail funds on UK property had redemption requests to the point that Redemptions were halted on some funds (since re-opened).
The longer-term implications, which have been well reported from the vote, are the possibility of banks leaving the UK because of uncertainty, thus creating higher funding costs later down the line. The earliest departure from the EU, 2019, coincides with Governor of the Bank of England retiring.
During the mid-August to mid-October period, the housing market activity has recovered since the referendum and rents are rising slightly, with regional variants. There was strong competition between retailers as business sentiment picked up but in general remained uncertain for longer-term.
Article credit: Copyright SUF © 2016