Weekly Retail & Leisure News - 05 July, 2016
over a week on from the EU Referendum, the short-term impact has been
uncertainty and market volatility. Consumer confidence has been hit in the
immediate aftermath, but is likely to rebound once the initial shock has
subsided; underlying economic fundamentals in the UK remain solid, certainly in
comparison to previous downturns. The Bank of England has announced that it is
likely to cut interest rates to cushion the blow of Brexit, maybe as soon as
July, which will provide further mortgage debt finance relief to consumers.
For retailers, it is very much a case of business as usual in the short-term,
until the full impact of the Referendum becomes clear. While mainstream
retailers are likely to be assessing the current situation, and some will defer
decision-making for a period, for some this is a good opportunity to capitalise
on the uncertainty, and position themselves for any fallout in the sector.
In the medium-term, a period of weak sterling will inevitably lead to rising
consumer prices and an end of price deflation for UK retail. The currency
fluctuations will, however, reduce the cost of exports, benefitting UK
retailers exporting globally. Currency movements could also boost tourism
numbers to the UK, from the US, European and Asian markets; this will be of
clear benefit to Central London and other UK tourist destinations. Other
sectors that could prove resilient include Food and Beverage, which has
demonstrated its defensive characteristics during previous downturns.
For further analysis of the potential implications of the EU Referendum on the
UK property market, please refer to our report, ‘EU
Referendum: Making sense of Brexit - 5 days on’.
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Director, Head of Retail Research (UK & EMEA)
+44 (0)20 3147 1155
Director, Head of UK Retail & Leisure
+44 (0)20 7318 7838
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