Not much of a Santa rally

Amongst the many things which Brexit is allegedly responsible for, one of the more real ones is the affect on sentiment. With so many remoaners In the Media and the City, not to mention the Government, positive sentiment is really lacking.


This can be seen in the very poor performance of the FTSE100 this year. At a likely growth of around 6-7% for the year it trails it usual comparators. The Trump inspired Dow is up nearly 20%, same for the Far East exchanges. Even the EU exchanges are up nearly 10%, even sclerotic France.


This is driven by a number of factors, the slowing UK economy which will have around 2% growth, not bad but slower than most of the G20. Of course, according to the Remoaners, we should have had a cataclysmic collapse by not but funnily enough has not come to pass.


But this negative sentiment has real world impacts, the Bank of England is slow to raise interest rates due to its remoaning fears, trailing the Fed and the ECB - as such, returns remain lower in the UK. FDI has also dropped a little  due to poor sentiment (which it always would in real-terms after a big devaluation) which has probably reduced growth. Even reduced immigration (also partly sentiment induced) reduces growth, less people coming to the UK reduces the overall output as we measure GDP and so adds to a slowing GDP picture (although, as we can also see, it really helps Government finances, already recovering more rapidly than expected and with little comment as to the obvious cause).


Sadly, this picture is unlikely to change, with remoaners in full voice for a second referendum to end Brexit. 2018 will be a tough time politically and this will continue to feed into poor sentiment. At some point a relentlessly poor sentiment can in fact lead to a recession as business confidence collapses - luckily as a trading nation the external environment will keep us out of there for sometime yet as companies do well overall, despite politicians trying their best to talk them down.