Before the referendum, many experts warned that Britain voting to leave the EU would cause financial markets to fall significantly. Global markets did fall the day after the vote, and the pound fell to what was its lowest level in 30 years. However, the worst fears haven’t been realised and the stock markets have bounced back very quickly.
Although the uncertainty before the referendum made financial markets volatile, it also meant they were prepared for either outcome. Which helped minimise the impact on markets when the result of the vote was announced.
Interest rates cut
The Bank of England also helped by cutting interest rates to a new record low of 0.25% in August. And the Central Bank is trying to keep the UK economy moving forwards by encouraging more lending.
Of course, we haven’t actually left the EU yet - the UK has to begin the two year process by triggering Article 50 which, according to the High Court ruling on 3 November 2016, now needs the support of Parliament. So there’s time for the Government to negotiate with the EU over trade agreements and other matters that will help prevent negative effects on the markets and our economy.
Look to the future
In such unpredictable times, financial markets might continue to be volatile in the short term and the US election will be one of the factors influencing the markets over the next few months. The important thing to remember about investments is that it’s the long-term that really matters rather than how they’re performing in the short term. However stock market-based investments place your capital at risk and you may get back less than you invested, which means the value of your investments and any income from them may fall as well as rise.
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Some areas of Inheritance Tax (IHT) Planning are not regulated by the Financial Conduct Authority. Some IHT planning solutions put your capital at risk so you may get back less than you originally invested. IHT thresholds depend on your individual circumstances and prevailing legislation, both of which may change in the future.