Three years on from the Brexit referendum – and three months after the Brexit deadline was extended – the issue of Brexit remained unresolved. June was taken up with speculation over the identity – and attitude towards Brexit – of the Conservative Party’s new leader and the UK’s new Prime Minister.
- The new Prime Minister will be announced on 23 July
- Consumer confidence continued to deteriorate
- The retailing sector remained under pressure
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Three years on from the Brexit referendum – and three months after the Brexit deadline was extended – the issue of Brexit remained unresolved. June was taken up with speculation over the identity – and attitude towards Brexit – of the Conservative Party’s new leader and the UK’s new Prime Minister. By the end of June, a series of votes had whittled down the contenders to the final two – Boris Johnson and Jeremy Hunt – and the eventual winner will be declared on 23 July.
“The perceived likelihood of a no-deal Brexit has risen”
Consumer confidence continued to deteriorate during May, according to GfK. Concerns over political instability and the possibility of a no-deal Brexit led UK households to become less optimistic about the economic outlook and their personal financial situation. Elsewhere, retail sales volumes fell at their fastest pace since March 2009 in the twelve months to June, according to the Confederation of British Industry (CBI), which cited “relatively cooler weather” and “challenging” conditions on the high street.
Beleaguered fashion retailer Bonmarché issued a trading update in which it warned that losses could be even greater than previously expected. Moreover, having previously opposed a takeover bid from Dubai-based Spectre Holdings, the company abandoned its opposition to the offer. Fashion retailer Ted Baker issued a profit warning, citing an “extremely difficult” environment.
Construction firm Kier issued a profit warning and revealed that its net debt position was likely to be higher than previously expected. Following its profit warning, Kier fell out of the FTSE 250 Index in the quarterly review of FTSE UK index constituents. Meanwhile, budget airline easyJet and Hikma Pharmaceuticals left the FTSE 100 Index and joined the FTSE 250 Index, having been dislodged by technology company Aveva and sports fashion retailer JD Sports who entered the FTSE 100 Index. Over June as a whole, the FTSE 100 Index rose by 3.7%, while the FTSE 250 Index climbed by 2.6%.
The Bank of England (BoE) expects economic growth to stall in the second quarter, downgrading its forecast for from 0.2% to zero. The UK economy grew by 0.5% in the first quarter, fuelled by stockpiling by companies ahead of the original Brexit deadline of 29 March. Policymakers believe that downside risks to growth have increased since their May meeting; global trade tensions have intensified, and the perceived likelihood of a no-deal Brexit has risen.
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