In his first Autumn statement as Chancellor, Philip Hammond has confirmed that the Office for Budget Responsibility (OBR) have cut growth forecasts due to the UK’s decision to leave the European Union. He warned that the OBR believe great uncertainty surrounds the forecast as it’s difficult to predict how the UK will depart the EU. I believe the numbers suggest the OBR believe Theresa May will eventually win the argument of ‘hard or soft’ Brexit and an exit from the EU and single market will materialise. The OBR expect 1.4% growth in 2017 compared to 2.2% which was predicted in March before the Brexit decision.
In addition the Chancellor tried to remain positive and stated the International Monetary Fund still believe growth in the UK will be equal to Germany and ahead of many of our neighbouring countries.
All in all, the statement did not spring any surprises however the Pound reacted well and gained a boost in the afternoon trading session. For foreign currency buyers in the next 6 months all eyes are now turned to how the UK will leave the EU.
Earlier this month the High Court ruled that UK Prime Minister Theresa May does not have the authority to trigger Article 50 of the Lisbon Treaty and start the process of leaving the EU before seeking approval from parliament. Mrs May is set to appeal the decision on the 5th December, the appeal will last 4 days and the decision will be released early next year.
Yesterday, protesters swept through London and gathered outside the House of Commons before the Chancellor delivered his first Autumn statement. Before the statement the Prime Minister gave support to the protesters and made it clear that she will do everything in her power to support the British public and make sure the Government deliver and trigger Article 50 in March.
I wouldn’t be surprised to see the Supreme Court overrule the high court next year and therefore the UK will leave the EU and single market. If this does occur I expect the Pound to devalue against the major currencies and therefore have a poor start to 2017. For clients in need of purchasing foreign currency in the next 6 months it may be worth discussing your options with your account manager.
With Theresa May set to challenge the High Court ruling, Sterling exchange rates could become volatile ahead of Decembers Supreme Court hearing. If youd like more information on this feel free to call 01494 725 353 or email me here to get a quote.
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