By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants. This column appears in the Pembrokeshire Herald, Carmarthen Herald and Llanelli Herald.
The ‘B’ word continues to dominate the news agenda and the headlines on TV, radio and on the printed press.
Brexit is the ever-present keyword of the day as we continue the countdown towards Britain’s proposed exit from the European Union.
Some of the Brexit news is good, some of it not so good, some of it bad.
For example, British households are the most upbeat about their finances since early 2015, buoyed up, of course, by near-record employment.
But the approach of Brexit and concerns about inflation are making them worry more about the future.
That’s what a new survey showed this week.
Households said they felt able to spend more as their earnings from employment rose at the fastest pace since the survey began.
Market research company IPSOS Mori interviewed 1,500 people for IHS Markit between August 9 and 13.
Britain’s unemployment rate sank to a new 43-year low of 4.0 percent in the three months to June and the share of people in work is only a fraction off a record high.
Sam Teague, an economist at IHS Markit, declared: “That said, the spectre of higher living costs on the horizon and ongoing Brexit uncertainty both contributed to renewed worries towards future household finances.”
Households’ pessimism about how their finances would fare over the next 12 months was the greatest since March 2017, when British Prime Minister Theresa May started the clock on a two-year period of Brexit negotiations.
With little more than seven months to go until Britain is due to leave the European Union, London and Brussels are still at odds over their future trading relationship, raising the prospect of no deal being reached.
The survey also found nearly 73 percent of respondents expected another Bank of England interest rate hike in the next 12 months.
The BoE raised interest rates for only the second time since the financial crisis on August 2.
BoE Governor Mark Carney said financial market expectations of one rate rise a year for the next couple of years was a good rule of thumb.
In other news, hot off the press from the Reuters news agency, Britain has extended its lead in the global currency trading business in the two years since it voted to leave the European Union.
It is reckoned to be another sign London is likely to continue to be one of the world’s top two financial centres – even after Brexit.
Leaving the European Union was supposed to deal a crippling blow to London’s position in global finance, prompting a mass exodus of jobs and business.
But with eight months to go, London has tightened rather than weakened its grip on foreign exchange trading, a Reuters analysis shows.
Foreign exchange – the largest and most interconnected of global markets, used by everyone from global airlines to money managers in transactions worth trillions of dollars a day – is the crowning jewel of London’s financial services industry.
Reuters’ analysis, based on surveys released by central banks in the five biggest trading centres, shows forex trading volumes in Britain had grown by 23 percent to a record daily average of $2.7 trillion (£2.1 trillion) in April compared to April 2016.
That was double the pace of its nearest rival, the United States, which was up 11 percent to $994 billion, mostly out of New York.
That means about two-fifths of all trades are handled in Britain, nearly all of them in London – a daily volume almost equivalent to the annual economic output of the United Kingdom.
The next three biggest markets are Singapore, which fell by 5 percent to $523 billion; Hong Kong, which grew 10 percent to $482 billion; and Japan, which increased by 2 percent to $415 billion.
London has dominated the foreign exchange market for nearly half a century.
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