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UK Businesses gain on cheap Pounds - Alldamoney

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UK Businesses gain on cheap Pounds

Businesses in the UK are having it good
Since Britain voted yes to leave the European Union, manufacturers are gaining business from the slide on the value of the pound.
Many economists predicted doom in the aftermath of the vote, but surprisingly Britain's economy has fared much better, with consumer spending strong and companies continuing to perform well.
The UK Manufacturing Purchasing Managers Index (PMI) rose to 56.1, the strongest reading since June 2014, from 53.6 in November. While in December, the investment and intermediate goods manufacturers performed particularly well, which help lift investment generally while Manufacturers hired staff at the fastest rate since October 2015.


The rise was fuelled by new orders from both home and abroad therefore showing signs the economy ended strongly in 2016.
On the other hand, Britain’s main stock index struck a record high today, putting the FTSE 100 index up to about 0.5 percent at 7,182. Although still lower than its earlier all-time high of 7,205.21.
The near 20 percent fall in the value of the pound across an array of currencies is credited to June's "Brexit" decision (On the eve of the vote, the pound was trading as high as $1.50. Now it's around $1.23). It’s also, why the FTSE 100 has hit a series of highs over the past few months.
Companies listed on the FTSE 100 that make the bulk of their revenue in other currencies will benefit from a weaker pound that will help their business abroad and paradoxically boosts the earnings of many.
Another survey of financial officers showed last week that business morale has recovered completely from plunge after the Brexit vote.
But because of uncertainty about the general economic outlook, companies are reluctant to spend more.
Britain's economy looks on track to expand by more than 2 percent this year - faster than almost all other big advanced economies except perhaps the United States.

Although the fall in the pound raises the prospect of higher inflation by making import costs more expensive, this could affect business and consumer spending.

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