Update: Is Britain still good for business now that Article 50 has been triggered?

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As our November analysis showed, the low value of the pound post Brexit resulted in a 500% increase in inbound searches for flights and hotels. This finding was in line with ForwardKey’s tourism market analysis report, which showed an immediate increase in international net bookings for arrival in the UK.

According to Google Trend data, there was actually an increase in the search term ‘flight to the UK’ in the days leading up to the triggering of Article 50.

Looking at how this search term has performed over the last five years, we can see an upward trajectory following seasonal trends.

The above graph shows demand for inbound flights has been relatively unaffected by the ‘Leave’ referendum result in June 2016 or by the triggering of Article 50 yesterday. The UK tourism market has also been seemingly resistant to any social stigma attached to Brexit. The long-term effects, however, are yet to be realised and the industry may not continue to display such resilience. The International Air Transport Association offers preliminary estimates that numbers of UK air passengers could be 3-5% lower by 2020, fuelled by a post Brexit economic downturn.

Retail does not paint such a rosy picture. In the first quarter of 2017 Amazon and eBay have seen decreases in traffic by 17.45% and 12.32% respectively, with the drop more pronounced in the last month.

The investment community is benefitting from an increase in foreign investment driven by the pound’s decline, demonstrated by the FTSE 250 index being 11% higher than it was on the eve of the referendum. Similarly, investment demand in UK domestic and commercial property is still on the rise, driven by the favourable exchange rate, despite concerns about relocation of UK-based companies’ post-Brexit. Inbound domestic property investment is still likely to centred in the buy-to-let market, further inflating rents whilst stifling residents’ chances of getting onto the property ladder (see analysis in NewStatesman).

Though Britain may have proven predictors of an economic apocalypse wrong in the aftermath of the referendum, this honeymoon period can largely be attributed to decreases in the trade deficit facilitated by a weaker pound.


According to the ONS, the balance of trade remained unchanged between December 2016 and January 2017, with exports increasing slightly more than imports.

The unexpected growth can also be accredited to the Bank of England’s efforts to boost the economy post Brexit by cutting interest rates from 0.5% to 0.25% in August last year in an effort to encourage borrowing.

The common thread running through all UK markets, however, is the presence of uncertainty. This may spell the end of the honeymoon period of post-Brexit growth. Business investment is slowing, according to the ONS. The gap is closing between inflation and wage increases. Construction costs are soaring, and the growth rate of house prices is half what it was a year ago at 2%.  A silver lining of the uncertainty, forecast to mar economic performance while negotiations unfold, is the immediate attraction of ‘hot money’ via direct foreign investment that thrives off a weak and unstable pound. In the meantime, the objectives of establishing competitive trade tariffs to foster an export-led economy and retaining the City as the World Financial Centre should be the focus of May’s negotiations. If these requirements are met, incoming foreign investment from the strong Dollar and Euro will boost the economy and trade deals will stimulate growth in sectors such as technology and engineering, free trade economists predict a 4% increase in GDP – a very business-like Brexit indeed.