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What is the impact of Brexit on the financial markets?

What is the impact of Brexit on the financial markets?


It's been a month since the UK voted to leave the EU.

This is both a substantial and unprecedented step for the UK which has generated significant debate and political turmoil. In the short term, this can create uncertainty in the investment markets.

So when will we move out of the EU?

The process to leave the EU is very complex and the UK has not yet activated Article 50 of The Treaty of Lisbon, which puts the formal legal mechanism  in place, to allow the UK to officially withdraw from the EU. And from that date, it has been cited it will take at least two years to negotiate our exit.

What's happening in the stock markets?

Following the referendum, stock markets initially reacted adversely, however some recovery has been made over the last month.  As of 22 July, the FTSE 100 share index, consisting of the largest companies, opened at 6699, higher than its pre-Brexit level. The FTSE 250 share index, which contains more UK focused companies, has increased since the low point following the Brexit result but remains a little lower than before the referendum.

The banks, house builders and airlines have particularly been affected whereas the price of gold has increased significantly.

What's happened to the pound?

Prior to the referendum, in anticipation of a 'remain' vote the value of the pound was at US $1.50. The value dropped following the announcement, most notably against the US dollar, but it has stabilised.

The weaker pound will make holidays abroad, petrol prices and imports potentially more expensive. But on the other side, exports from the UK will be cheaper abroad, making them more competitive.

What will happen in the future?

It's important to remember that markets and the value of the pound fluctuate daily and no-one can exactly predict whether the value will go down, go up or stay the same, and when. So, you may feel that cashing in your investments will protect them from further falls, however you could miss out on future rises if you don't time it well. Therefore, we encourage you not to make any rash decisions.

Wesleyan's financial strength

We want to reassure you that we are in a strong position to weather any volatility in the investment markets. As a mutual, with no shareholders to consider, we can focus on making the right long-term decisions on behalf of our members. In recent times, we have been through several periods of market weakness and have proven procedures in place to protect our financial strength and your investments.

The investment and pensions products we offer are designed to be medium- to long-term plans. Market fluctuations may have some short-term impact on the value of policies, but we firmly believe that over the longer term they are designed to withstand the ups and downs of the markets.

Our approach to investing

We have a long-term approach to investing and use market turbulence to our advantage, buying equities that are temporarily out of favour to further strengthen our financial position. Our investment team will continue to look for such opportunities to help build the future of Wesleyan and enable us to generate healthy payouts for our policyholders.

We will keep you informed over the coming weeks and beyond, so please refer to our website for updates. We have a nationwide team of specialist Financial Consultants that can help you with any concerns you may have.

To contact us, please email financialreview@wesleyan.co.uk quoting 80681.

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

Click for more information about the Wesleyan group of companies.

© 2018 Wesleyan Assurance Society