In a move that surprised the City of London, the Bank of England announced on 14 July that the Bank Rate would remain frozen at 0.5% – the level they have been at since March 2009 – at least for the time being.
Only one member of the Bank’s nine-strong Monetary Policy Committee voted for a cut to a 0.25% – which some commentators had expected in response to the fall in the value of the pound and financial upheaval following the referendum result.
It’s very early days and it’s clear that the Bank of England won’t rush into any hasty decisions. On the positive side, the Bank’s latest monetary policy summary http://www.bankofengland.co.uk/publications/Pages/news/2016/007.aspx
highlighted the strength of the UK economy. saying that “markets have functioned well”, and the improved resilience of the core of the UK financial system and the flexibility of the regulatory framework have allowed the impact of the referendum result to be dampened rather than amplified”.
Nevertheless, it does highlight some early warning signs, including falls in consumer and business confidence. It adds: “regarding the housing market, survey data point to a significant weakening in expected activity.”
Meanwhile the Royal Institute of Chartered Surveyors (RICS) has reported a decline in new buyer enquiries in June 2016, “with 36% more chartered surveyors nationally reporting a fall in interest”.
The RICS UK Residential Market Survey for June 2016
also reported that although house prices continued to rise, they did so at a “more moderate pace”. However, the report suggests that a slow-down in the housing market would have been likely in the second quarter with or without the referendum, as a result of rush to complete buy-to-let purchases before the new tax regulations came into force earlier in the year.
The coming months will tell us more. Overall, there is a sense of caution right now. But caution isn’t necessarily a bad thing in uncertain times. We make all considerations regarding different indicators to make sure we can provide our clients with the best possible advice when they need it. Have your financial or property plans been influenced by the Brexit vote? If you’ve got any concerns, we’d be very interested to hear from you.
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