Helping CFOs plan through changeable conditions
On the cusp of a dream or the edge of the cliff?
With all the heavy pressure and the storm of opinion and commentary surrounding Brexit, it’s easy to overlook the most important point; we are living through history right now. What happens in the next few weeks will affect the UK and Europe for at least a generation to come. Much of what will be decided will not be simple to unravel. We can’t savour this moment in time though, because we are right in the eye of this storm.
An Index can’t solve these problems but it can shed a clear light on affairs, and help us to understand the bigger picture. We hope that the Brexometer gives you a dispassionate and elevated viewpoint on events.
We had been led to expect a deal with the EU by now, and there is a lot of negotiating activity, but we seem to be a long way off an outcome. Whilst this painful uncertainty continues, we are stuck in the Brexit waiting room, nervously awaiting the results of the tests.
In such a state of limbo it is no real surprise that the UK suffered a setback in November, with the Brexometer showing a reading of 5.12 . This is a fall of thirteen basis points from the October score of 5.25,which is one of the larger monthly movements in the Index since inception. Whilst this November score of the Accountagility Index (AAX) is in positive territory (any score above 5.00 is positive), it is below the pre-Brexit benchmark of 5.18, and miles short of the record high of 5.43 seen in July. The Index records UK political and economic health on a score out of ten.
What caused the rise this month?
The most substantial contributor to the downward change was the further fall in the UK market indices, but there was also a sharp drop in confidence in both the Services and Manufacturing sectors, and increasing political concerns. The only positives in October were the improvement in the inflation numbers and some increase in business activity in the Construction sector, mainly due to expansion in civil engineering.
What happens next?
If there is a breakthrough in the Brexit talks, this would have an immediate and positive impact on the Index, whereas further uncertainty would see the Brexometer slide back towards a neutral territory. Another question is emerging too… headwinds in the global economy are becoming stronger. Behind the large screen of the Brexit movie, will the cumulative effect of trade wars, the worldwide slowdown and tightening market liquidity heave into view, with negative consequences?
Living through historic times makes for stress and turmoil, but at least it’s not boring.
Over the coming days, will the Brexit negotiations finally come to a conclusion, and then how will the deal be ratified? And how will this impact the Index?
Keep following the Brexometer to find out