Britain Prime Minister Theresa May has made it clear that Brexit pain lies ahead as the country looks to exit the European Union. May said that the wrangling (and the logistics) of getting the country out of the EU will likely prove to be “exceptionally painful.”
However, this week brought in some good news despite the uncertain times.
In this week’s Brexit Tracker, Snapchat casts a vote of confidence in London, U.K. consumer spending is on the rise and house prices in the country show signs of strength.
Snapchat’s London Move
The social networking app announced Tuesday (Jan. 10) plans to make London the home base of its international operations, a move that shows a certainty in a post-Brexit environment.
Rather than routing sales through lower tax jurisdictions, Reuters reported that Snapchat will book sales in countries where it has no local entity in the U.K. The company told Reuters that Britain’s strong creative industries make it “a great place to build a global business.”
London’s status as a global FinTech center also presents the opportunity for startups to raise funding and bigger companies to gain capital.
“We believe in the U.K. creative industries,” Claire Valoti, general manager of Snap Group in the U.K., told Reuters.
“The U.K. is where our advertising clients are, where more than 10 million daily Snapchatters are and where we’ve already begun to hire talent.”
With nearly 150 million daily users globally, the messaging app also has big plans this year to go public — ensuring it will have the biggest stock market debut since 2014.
Spending Still Soars
If consumers are concerned about Brexit, it’s not showing in their buying habits.
New research from Visa showed cash withdrawals and card spending in the last months of 2016 grew by an average of 2.8 percent. This was twice as much as the average rates measured in Q2 and Q3.
Despite the concerns and challenges that have arisen since last year’s Brexit decision, U.K. consumer spending is on the rise. The results show the fastest quarterly growth since the last three months of 2014, Business Insider noted.
“Growth was once again led by the experience sector, with consumers going to Christmas markets, traveling to visit loved ones or venturing to various parts of the country to celebrate. Food was, unsurprisingly, another sector which performed well, with spend up 2.9 percent,” Kevin Jenkins, U.K. and Ireland managing director at Visa, said in a statement.
Jenkins noted that the overall growth was boosted by Christmas-related activities and a national sales drive. While the U.K.’s vote to leave the EU has created uncertain conditions for retailers, online sales in December remained strong, and even brick-and-mortar locations saw an improvement.
Can Housing Prices Ride The Wave?
The good news: Housing prices in the U.K. ended 2016 on a strong note.
The bad news: Economists aren’t sure how long the streak will last.
Over the course of 2017, mortgage lender Halifax pointed out, slower growth and rising inflation could work together to reduce demand for home buying.
“The relatively wide range for the forecast reflects the higher-than-normal degree of uncertainty regarding the prospects for the U.K. economy this year,” Martin Ellis, an economist at Halifax, told Bloomberg. “Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand.”
Surprisingly, Bloomberg noted, both the housing market and the U.K. economy have remained relatively stable since the official decision was made last June that set in motion Britain’s plans to leave the EU.
But the year ahead may give way to more challenges in the form of rising inflation and the beginning of formal exit negotiations.