Counting down to Hallowe’en

As Brexit rumbled towards its Halloween deadline, investors’ attention during September was absorbed by a series of political developments. Having been prorogued earlier in the month, Parliament was subsequently recalled towards the end of September following the Supreme Court’s surprise decision that the suspension had been unlawful.  

  • M&S fell out of the FTSE 100 Index for the first time since its launch in 1984
  • The retail sector remained under pressure
  • CPI inflation fell to its lowest annualised rate since late 2016

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As Brexit rumbled towards its Halloween deadline, investors’ attention during September was absorbed by a series of political developments. Having been prorogued earlier in the month, Parliament was subsequently recalled towards the end of September following the Supreme Court’s surprise decision that the suspension had been unlawful.  During September, MPs passed the “Benn Act”, which will force the Prime Minister to either to request an extension to the 31 October deadline, or to obtain MPs’ agreement to a no-deal Brexit, by 19 October. Despite this, Prime Minister Boris Johnson repeated his assertion that UK will leave the EU on 31 October as planned, whether or not a deal has been agreed. With less than a month to go, speculation over the likelihood of a General Election continued to gain traction. The FTSE 100 Index and the FTSE 250 Index both rose by 2.8% over September. 

“Speculation over the likelihood of a General Election continued to gain traction”

According to the British Chambers of Commerce (BCC), 41% of UK companies have not undertaken a Brexit risk assessment. The BCC warned: “With just weeks until a potential no-deal exit, there is still a large proportion of firms that aren’t in a position to prepare for the impact”.

The UK’s retail sector remained under pressure during September. High-street retailer M&S lost its place in the FTSE 100 Index for the first time since the blue-chip index was launched in 1984. Meanwhile, furniture retailer DFS warned that sales are being hampered by weak consumer confidence and a lacklustre housing market against a backdrop of political and economic uncertainty. Elsewhere, research from PwC and the Local Data Company found that an average of 16 stores closed every day in the UK over the first six months of 2019. Fashion retailers were the hardest hit, although restaurants, estate agents and pubs also suffered. 

Manufacturing activity fell at the most rapid rate for over seven years during August, according to IHS Markit/CIPS. The sector was dragged down by Brexit-related uncertainties and wider concerns about the global economy. New orders posted their steepest decline since mid-2012 and business confidence also fell to its lowest level since 2012.

Inflation dipped sharply in August, driven down by weak clothing prices and a steep drop in prices for computer games. The UK’s annualised rate of consumer price inflation fell from 2.1% in July to 1.7% – its lowest rate since late 2016.


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