While it will be sometime until the full effects of Brexit become clear, a picture is now emerging of how people are hedging their bets and of rising prices. A summary of the main impacts are listed below:
- The average time to sell a property has increased significantly in London and the South East of England, while areas such as Manchester continue to do well (Source: The Times 17-2-2017).
- Properties in some areas are also now being offered at a discount in order to sell them (Source: The Times 17-2-2017). Property prices and trades are a key driver of the UK economy.
- Factory import prices rose at their fastest rate for many years – this relates to the cost of goods that are imported in order to manufacture goods in the UK.
- UK fuel prices rose 16.1% in January, in part due to the falling pound (Source: BBC).
- The falling pound (one perhaps good part of Brexit, as it was always overvalued) this means that UK exports are now far cheaper. This has led a boom in exports in 2016, but with access to the single market off the table it remains to be seen how long that will last. Also reports are now that exports are falling (Source: Guardian)
- Retail spending (a major part of the UK economy) has fallen at its highest rate since 2013. If this continues to contract then the UK could enter a recession. (Source: BBC).
- Overall inflation is now 1.8% up from the past and is set to hit in excess of 2.5%-4% according to predictions.
- Leading companies such as Apple and Microsoft have already started to indicate that prices will rise, with Microsoft increasing UK prices by 22%.
I will concede that a falling pound may in the long term be a good thing for British industry and jobs but this can only be the case if manufacturers are able to source their parts/inputs from other British companies. Otherwise costs will rise and may cancel out all or most of the competitive advantage which has been gained. A spike in import costs may also provide a required jolt to the general population as well the UK has never really had meaningful trade surpluses in over 30 years and constantly runs a trade and Government deficit worse than Greece.
- The UK Government has refused to increase NHS spending due to underlying economic issues, the net result is according to a recent report around 30,000 excess deaths in hospitals in 2015. The worst in 50 years (Source: The Mirror). Not the fault of Brexit but if funding continues to be relatively static or falls then these death rates will probably increase. As we have been warned that there will be bumps ahead in the economy we should expect further cuts, also if the cost of importing medicines and equipment rises it will only get worse. Add to that the desire to drive out foreigners who work in the NHS, again things are hardly going to get better.
- Britain still has an appalling fuel poverty death rate, with 40,000 people estimated to be dying each year due to not being able to pay their bills (Source: The Telegraph). As noted above fuel costs recently rose by 16.1%, so for many the choice of whether to heat their home is now a life or death decision.
It should be kept in mind that the Conservative Party is not averse to brutal “social cleansing” policies which suit their own electoral means. In the 1980s housing policy in Westminster City Council was used to increase the number of Conservative voters. In the end the then Leader, Dame Shirley Porter was fined 42m UKP. Despite being an heiress to the Tesco supermarket chain founders she claimed to have only 300,000 UKP in assets. In the end she agreed to pay 12.3m UKP in 2004. The money magically appeared or perhaps her wealth grew due to sound financial management during this period. (Sources: Wikipedia , Telegraph). The said Tory Council leader decided to move to Israel where she now lives. It should be noted similar policies have started to re-emerge in in London since 2010.