Remember summer 2014 in the City of London? It rained a lot. A pound was worth 1.71 dollars. Interest rates were still expected to normalize, the FTSE 100 was nearing 7,000, and finance recruitment firm Morgan McKinley calculated that 8,500 jobs came onto the market in June. If you had the opportunity to swap jobs then, maybe you should’ve taken it?
The chart below, taken from today’s ‘Agents’ summary’ from the Bank of England, suggests that June 2014 was the peak of the current cycle for the UK’s professional and financial services firms. Since then, it’s all been downhill – slowly at first, but at a gathering pace.
The agents’ summary assimilates views taken from the Bank’s agents across the UK. As such, it’s an assimilation of sentiment about output rather than output itself. The chart above reflects views garnered about activity by the banks’ agents between late June 2016 and late July 2016. Around the referendum and in its aftermath.
There have clearly been dips in sentiment before – in 2007, for example, and to a lesser extent in 2012. In 2012, things started looking up again within a year but in 2007 it was three years before things turned. This time, Brexit negotiations will determine what happens next, but for the moment we seem to be on the way down from the plateau of plenty whose summit was reached around 24 months ago.
Photo credit: Donald Miralle, Getty