Leisure & the Brexit vote – Assessing the Impact

July 5 2016

The initial financial impact.

52% of voters (38% of the electorate) voted to leave the EU on 23 June
The FTSE100 fell then rose. It is now +3% since 23 June.
But FTSE100 is an international index. In US$ terms (pound down 13%), it is down 10%.
The largely domestic FTSE250 is down 9% in Sterling terms and down 21% in US$s

Interpretation:

International earnings are worth more in Sterling terms
But UK-centric companies face an uncertain short & medium term future

Is there any tangible, on-the-ground evidence?

Companies also lack visibility
The Construction PMI was poor but the Services PMI wasn’t too bad
Both were 80% pre-Brexit vote measures
In the near term, the movement of Easter (April to March), the slipping of the Half Term holiday into June & the football could hinder analysis
Additionally, last week was the hottest of the year in 2015. Hence pubs faced tough but restaurants (and cinemas etc.) faced soft comps

Young & Co.

It may be misleading to micro-analyse
But Young & Co today said that it was +4.1% LfL at wk13 (to 27 June).
It had been +5.3% at wk7 suggesting +2.7% in the last 6wks
Anecdotally May was > April hence the slowdown was June
June faced tough weather comps but should have benefited from the football

Conclusion:

Very hard to conclude but caution seems to be the watchword
Re business. Comment on business confidence => investment => employment will be critical. The outlook here, given uncertainty, is tricky.
Re consumers. Employment trends => confidence => spending patterns. See ‘business’ above.