Archives: Blog Brexometer

Recent events have shown that Theresa May has some fine joinery skills – first, she crafted a Brexit construction and secured it with more than just sticky tape, then repaired the whole cabinet when it looked like it was falling to pieces.

Now she must take steel with her to Brussels for the next round of Brexit negotiations, that start on 17th July. Away from all this carpentry, the real world is building its own construction, and it is starting to look quite interesting. Perhaps it quite likes the idea of a soft Brexit because the UK has actually climbed 11 basis points this months, with a score of 5.43. June’s score was 5.32

July Brexometer Reading

The July score of the Accountagility Index (AAX) is a post referendum record, beating the previous peak of 5.38 back in January and well ahead of the pre-Brexit benchmark of 5.18. The Index records UK political and economic health in a score out of ten, any score above 5.00 is positive.

This increase feels a little counter-intuitive, so what made up the rise? The big mover has been the sizeable increase in foreign inward investment, which has been rising strongly over the past twelve months, and lept up in June. Sentiment continues to improve, especially in services (where the strongest growth rate for nine months was observed) and Construction (driven by accelerated house building). June’s overall confidence score is 55.5 out of 100.

The Accountagility Index Rating for July

What does the softer Brexit proposal mean for the economy? Whilst there has been a heightened political uncertainty, the likelihood of retention of access to European markets will be seen by many in business as being wholly positive.

The other side of this coin is that international trade agreements may take a back seat in the government’s priorities, and their room for manoeuvre to strike them may be impacted. This month we have also noted that the potential for a disorderly exit from the EU has increased.

Keep Next month, Parliament is in recess but the next round of Brexit negotiations will be in full swing. How will the Index react? Can it continue to surge or will it all come crashing down to earth?

Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

The intense political negotiations have resulted in a victory for the Government but the clouds of Brexit uncertainty have tainted the score this month. The Brexometer reading is identical this month, with the Index stuck on May’s reading of 5.32.

The June score of the Accountagility Index (AAX) is a few basis points shy of the post-Brexit peak of 5.38. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

June Brexometer Reading

Last month we asked if politics would stop the spring surge in the Index, and that is exactly what has happened. Although the Westminster gridlock between the two Houses is resolved for now, Theresa May had to rely on her Whips bringing in the sick and infirm into the Chamber for the vote. The majority was gained with a concession, which leaves her with severe challenges to negotiate with the EU and then drive the resulting agreement through Parliament.

Elsewhere economic factors are unchanged this month, except for a small fall in CPI inflation and a healthy reduction in the UK’s net debt. On inflation, the surge in the oil price will start to seep through into figures soon, and will arrest the decline in the inflation that was still coming through from the pound’s fall in 2016.

The Accountagility Index Rating for June

Astonishingly at such a flat moment, there were increases in the markets and sentiment. There was further improvement in the Service sector, but decision-making in the larger corporate clients is being held back by Brexit paralysis. There was no change on the Construction sector, with house-building propping up the numbers. Despite 22 straight months of expansion in the Manufacturing sector, a slower rate of growth is now clearly evident from significant falls in inventories and backlogs. Despite all of this, GDP is set to grow at 0.3-0.4% in Q2.

Next month, how will the Index react to the next round of Brexit negotiations? Has the Index peaked or is there more to come?

Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

The UK shook off the wintry thrall this month, rebounding from the snow and ice to leap 15 basis points to 5.32. April was 5.17. The real climate has been dominating the economic climate for the past two months now. Whilst the bounce back in the weather after the snowy period has been muted, it had been accompanied by a recovery of UK markets.

The May score of the Accountagility Index (AAX) is now rising strongly towards the post-Brexit peak of 5.38. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

May Brexometer Reading

The two drivers of the upward move in May were recovery of UK markets and the improvement in business sentiment.

Looking at the detail, improvements in GDP growth, ongoing reduction in inflation and unemployment were further positive factors. On the other hand, falls in sterling, increase in debt and concerns about the UK’s lack of cohesion on its stance on the customs union, have held the Index back.

The Accountagility Index Rating for May

The Brexit talks will dominate the political agenda over the coming weeks. Can Theresa May keep her troops in a single cohort and lead a clear negotiating position?

Next month, will politics steal the headlines or will the surge continue?

Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

The UK stood still for a second successive month in April, as the snow and ice of March reduced economic activity and depressed business confidence.

The April reading of the Accountagility Index (AAX) saw a minuscule rise of one basis point to 5.17, from 5.16 in March. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

April Brexometer Reading

The key mover and shaker in March was the dramatic reduction in sentiment in the Services and Construction sectors. According to commentators in the important Service industry, the UK simply iced up. The slowdown in business activity was the sharpest for 18 months. In Construction, civil engineering work declined at the fastest pace for five years. This negative movement was offset by the fall in inflation, which is finally dropping out of the system.

The Accountagility Index Rating for April

This month we are focussing on the good news around employment, which improved this month again, following steady falls since the Brexit vote. At only 4.3%, it represents the lowest unemployment rate since 1975, two generations ago. The economy is heading towards effective full employment and compares favourably with the EU whose average rate is 7.3%. It is not very far from Germany’s healthy 3.6%. Imagine life in other EU countries, though, where unemployment is having an impact on social cohesion; 6.1% at our neighbours Ireland, 9% in France, 11.1% in Italy and a crushing 20.9% in Greece. Let us bask in this performance – if only for this month. However, whatever view you may have of Brexit, there is evidence of a demand for more workers from outside Britain over the coming years, based on this trend.

Despite the sentiment worries, there are silver linings to provide warmth. The Manufacturing sector held steady last month, and even in Construction, future expectations and job creation are increasing. So there are some reasons to be cheerful.

Next month, will a delayed spring finally burst forth, seeding an economic bloom? Will there be no more icing on the pavement, but more icing on our cake?

Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

The UK is biding its time this month.

Whilst the March reading of the Accountagility Index (AAX) saw a second successive fall, the value of the drop to 5.16 from 5.19 was only 3 basis points. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

March Brexometer Reading

March sees a continuation of conflicting messages observed over the past few months:

• GDP has dropped to 1.5% (as per the IMF forecast for 2018) and 1.4% (last twelve months’ actuals)
• But business sentiment is up, aligned to modest gains in the FTSE 250

The Brexit process is still a source of worry for many, and recent statements by EU and UK spokespersons pinpoint significant differences between the sides. Depending on your viewpoint, it is either “EU bullying” or “lack of clarity in the UK stance”. Other measures of note this time are signs that the stubborn inflationary hump may be past its peak, and a healthy reduction in the UK debt ratio as government income increases.

The Accountagility Index Rating for March

Putting a magnifying glass to the sentiment changes is illuminating. There was a faster rise in Services orders, leading to job creation, with business-to-business sales growth prominent. On the flipside, manufacturers’ confidence has been falling since last November; yet even here there is good news as orders from export markets like USA, China and Europe are up (not that you would see this based on the headlines). Construction companies are fretting about cost pressures, but are seeing a small increase in output. In summary, another month of a colourful patchwork quilt!

Next month, will we see a spring in the step or will we be dancing with an April fool? Will the Brexit music start? How will failures in the High Street and in the outsourcing sector affect the tempo?

Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

After three months of positive momentum, the UK has gone over the edge of the crest and the Accountagility Index (AAX) has dropped by 19 basis points to 5.19 this month, after hitting a post-Referendum high of 5.38 in January. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

February Brexometer Reading

The Index was driven lower by the jitters on Wall Street, caused by expectations of higher US inflation and interest rates later this year. Whilst this could be a blip, several other factors (sentiment, growth, inflation and debt) reinforced the first downward movement of the Index since October.

Yet again the feeling of being on a giant rollercoaster is upon us. Two months of dip, then three months of climb, and now another dip. Whatever the trajectory, we are in a period of chronic uncertainty, a landscape of Brexit flux.

The Brexometer has been created to provide a balanced view of the state of UK plc. This month the positive factors are the optimism in small and medium firms across the Board, continuing hiring decisions and the return to growth of both commercial building and civil engineering activity.

The Accountagility Index Rating for February

And yet, many of us are asking “What does this period of flux mean for my business?” Many companies are spending time on self-assessment and reflection, leading to sharper planning, which according to Adam Marshall, the Director General of the British Chambers of Commerce, in an article this week, “could unleash pent-up investment” especially around technology and training. Can this chronic change be the catalyst for greater scenario planning and improved performance?

We will find out the answers to this and many other vital questions over the course of this year, which we believe will represent the road to Operational Excellence. In the next few weeks, will the Brexit talks accelerate? Will we see more benign market movements and an easing off of inflationary pressures? Will the next part of the ride be up or down?

Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

The UK has remained cool, calm and collected over the Yuletide break, climbing a modest three basis points since December to record a score of 5.38 on the Accountagility Index (AAX). Whilst this is technically an all-time high, the trend this month is flat. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

January Brexometer Reading

The key drivers have been muted over the midwinter holiday period, but markets are continuing to rise, UK debt is dropping and inward investment is creeping up. To compensate for these factors, there was a drop in the Pound. Looking at how sentiment ended the year is instructive, as it conveyed simultaneous positive and negative messages across all three segments of Services, Manufacturing and Construction. There was a sharper rise in business activity in Services, but then again new order growth fell to a 16 month low. In Manufacturing, there was a solid end to the year but confidence fell, and input inflation is rearing its ugly head. In Construction, residential building orders are up, creating new jobs, but work is falling for commercial projects. Pick the bones out of that! The truth is, the entire picture is a patchwork quilt.

The Accountagility Index Rating for January

Other measures were neutral this month. Of course the Parliamentary recess contributes to the sense of calm.

Whilst this is all encouraging, there are still many uncertainties. Will Theresa May regain control of her party? What will the resumption of the EU talks bring? What other excitements will this New Year bring? Can the Index continue on its upward path?

Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

The UK has made positive progress over the past month, culminating in the agreement between the EU and UK Brexit negotiating teams on 8th December. The Accountagility Index (AAX) has climbed to an all-time high of 5.35, an uptick of 19 basis points from November’s reading, and well above the pre-Referendum benchmark of 5.18. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

December Brexometer Reading

The key driver moving the Index has been the impact of the Brexit agreement, which has affected all of the political metrics. Other developments which would have depressed the Index were the rise in inflation, the drop in the markets and the negative sentiment with the US over the past weeks. On the other hand, the Pound gained a little and there was further support for a rosier view of the UK economy with sharp increases in the confidence and order books in the Manufacturing and Construction sectors. Whilst the UK Services confidence fell back slightly, the level is still consistent with a Fourth Quarter growth of 0.45%, or an annual growth rate of 1.8%.

Other measures were neutral this month.

The Accountagility Index Rating for December

Whilst this is all encouraging, there are still many uncertainties. Will the EU trade talks go smoothly? Will the messages coming from UK politicians continue to be maddeningly contradictory? Can the Index continue on its upward path since the Election? Will the winter break cause new discontinuity?

Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

The UK has made forward progress in the placid month of October, with the Accountagility (AAX) rising from 5.03 last month to a six month high of 5.16. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

November Brexometer Reading

The key driver moving the Index has been an increased level of business confidence and activity. This improvement was the most marked in the important Services sector, but the Construction sector benefitted from an upsurge in residential building work. Meanwhile the Manufacturing sector is robust, and boasts the strongest level of all three indices, driven by a rising export order book.

Most other measures were neutral this month.

But what is to come? Experts are concerned that the froth of the confidence rating hides a multitude of longer-term negative signs, and that deeper issues lie just below the surface. The medium term prognosis is regarded as fragile.

The Accountagility Index Rating for November

As we head towards 2018, there are both chilly and warming winds building up on either side of the course ahead. Interest rates will now start to recede, at last, but based on simple historical facts, the markets look dangerously high. The most important developments undoubtedly surround the Brexit talks. You feel that there needs to be a breakthrough soon. Will that happen this month? Can the good ship HMS Britain continue to forge ahead or will it get blown into the shallows? Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning

The UK continues to remain in the positive this month (just) with a score on the Accountagility Index (AAX) for October of 5.03. It is almost unchanged from last month’s reading of 5.04. The Index records UK political and economic health in a score out of ten, and any score above 5.00 is positive.

But as any follower of the news will testify, the apparent steadiness of the score hides a welter of countless extreme headlines and political oscillations. And this is why the Brexometer is there – to give a clear overall picture each month, when everything seems clouded.

October Brexometer Reading

Some commentators have compared the Prime Minister’s keynote speech at the Conservative Party Conference last week to the condition of the UK:

• The spluttering and failing delivery parallels the falls in forecasts in the construction sector
• The problematic backcloth is a mirror for the fall in GDP (from 1.68% to 1.51% over the past month)
• The letters behind her falling to the floor are an analogy for the UK’s negotiating messages to the EU falling on stony ground
• The prankster’s offer of a P45 reflects the lack of leadership seen over recent months
• Even Philip Hammond’s offer of a throat lozenge seemed to presage the promise of help from the financial sector, to calm and soothe the situation (indeed the PMI for the services sector this month did bolster the overall confidence level and keep it in positive territory)

The Accountagility Index Rating for October

But below the screaming headlines the real numbers do not lie. The reason why the Index is stable this month, is that September has actually seen a perfect balance between positive and negative developments:

Positives

• IMF forecast is up
• Unemployment has fallen again
• Sterling climbed to a new peak (78% on the Index)
• Services confidence increased to 53.6%
• Markets rose
• There was a leap in overseas investment

Negatives

• GDP has fallen
• Both RPI and CPI stubbornly continue to rise
• Although Sterling hit a new peak, it fell in the last week
• Construction dropped like a stone due to lack of new Civil Engineering projects
• Public Sector debt is still on an upward trajectory
• Brexit negotiations continue to flounder and the Aerospace trade dispute with the US is casting a shadow

Looking ahead, the imponderables are many. Can Theresa assert some authority? Will the Brexit negotiations get out of first gear? Can the Brexometer stay positive? Keep following the Brexometer to find out.

What makes up the Accountagility Index (AAX)?

The data used to calculate the Accountagility Index are based on eleven key factors, all derived from a diverse range of independent and credible sources​

• UK economic growth – A key building block of UK prosperity
• Markets – Reflects the health of larger British companies
• UK inflation – An important measure which needs to be carefully monitored
• Sterling strength – Affects imports, exports and confidence
• UK employment – Impacts so many aspects of UK economic activity
• UK Debt ratio – Tracks the UK’s progress against long term balancing of the books
• FDI (Foreign Direct Investment) – Illustrates the practical confidence levels from outside the UK
• Sentiment – Can be often the most important factor in how the economy is perceived
• Political stability/environment – A must include measure which can have instant impact on the big picture
• Progress on Brexit negotiations – Casts a very long shadow over all things
• Progress of International trade talks – A vital indicator of the UK’s international positioning