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Brexit negotiations are cleared to move on

December 2017

The UK performed relatively strongly during December compared with many other major equity markets; over 2017 as a whole, however, the performance of the FTSE 100 Index was dwarfed by double-digit returns from overseas markets including the US, Japan and Germany. 

  • Medium-sized UK companies outperformed large caps over 2017
  • The EU Withdrawal Bill was defeated in the House of Commons
  • Nevertheless, Brexit discussions were allowed to move on to the next stage

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The UK performed relatively strongly during December compared with many other major equity markets; over 2017 as a whole, however, the performance of the FTSE 100 Index was dwarfed by double-digit returns from overseas markets including the US, Japan and Germany. 

“Annualised CPI rose to 3.1% during the month, reaching its highest rate since March 2012” 

The FTSE 100 Index rose by 7.6% during 2017, and by 4.9% in December. In comparison, the FTSE 250 Index – which tends to be more focused on the domestic UK market than the FTSE 100 Index – rose by 3.9% in December, and by 14.7% over 2017. An agreed takeover of betting company and FTSE 250 Index constituent Ladbrokes Coral by online gambling rival GVC was announced during the month. Both the FTSE 100 Index and the FTSE 250 Index ended the year at new all-time highs, fuelled by hopes that some UK-listed companies might benefit from US President Trump’s controversial tax reforms. 

Although Prime Minister Theresa May was defeated in the House of Commons over the EU Withdrawal Bill, EU leaders decided that the UK had made sufficient progress on key Brexit issues to allow discussions to move on to the next stage. This will allow negotiations on the crucial issue of trade to begin.

Prices rose and growth slowed in the UK’s services sector during November as companies passed on higher costs to customers. Prices in the sector climbed at their fastest monthly rate since August 2008. Retail sales volumes rose at an annualised rate of 1.6% during November, boosted by strong demand for “Black Friday” bargains. Meanwhile, annualised consumer price inflation rose to 3.1% during the month, reaching its highest rate since March 2012. The Bank of England maintained its key interest rate at 0.5% at its December monetary policy meeting. 

2017 was a record year for the UK investment company sector, according to the Association of Investment Companies (AIC). Total assets under management and secondary fundraising reached record levels during the year; meanwhile, during May, the average discount narrowed to 1.8% – its narrowest ever. Investors’ appetite for new issues in the sector strengthened during 2017: there were 15 new issues during the first 11 months of the year, compared with seven during the same period in 2016, representing an annualised increase of 92%. Over half of these new issues were in the property sector, which also accounted for 56% of total assets raised. 


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