Following the two year anniversary of Brexit, UK peer-to-peer lender Lending Works analyzed the economy, fintech, and peer-to-peer lending industry following the historic EU referendum. The online lender revealed:
“Last week marks two years since the historic EU referendum, which saw the British people stun pollsters and pundits by returning a 52-48 majority in favor of Brexit. It has underpinned much of our political discourse ever since, and with just nine months to go until the UK officially leaves the European Union, there remains uncertainty about what the future holds for our relationship with the bloc. Yet, casting aside all the noise, how has the UK economy actually fared over the past two years? And what of the fortunes of fintech, peer-to-peer lending (P2P) and a company like Lending Works – past, present, and future?”
Lending Works reported the referendum vote resulted in a frenzy within the UK and global markets. It caused a plug in the vase of pounds sterling by some 15 percent against major currencies, and even Prime Minister David Cameron resigned. Lending Works reflected:
“A bumpy six weeks left the Bank of England feeling the need to act, as they cut base rates in August 2016 from already-historic lows to just 0.25 percent. Yet in the months that followed, this loosening of monetary policy came in for criticism from some quarters, with the economy performing considerably better than the gloomy forecasts in the wake of the vote. In the final quarter of 2016 alone, GDP growth was an impressive 0.6 percent, the FTSE embarked upon a record-breaking rampage and employment continued to rise.”
Lending Works then reported that the pattern was replicated to a lesser extent in the following year with growth remaining strong at 1.8 percent for the year. Luckily, the stock market continued to flourish and even unemployment fell. There were some downsides, including the rising inflation beyond the Bank’s target of two percent, real wage growth began to decline (remaining low for over a year and eventually rising above the CPI in April 2018). In regards to how Brexit has affected the fintech and P2P lending industry, Lending Works shared:
“Fintech has been one of Britain’s great strengths in recent years, and a high concentration of these agile firms, both in London and beyond, has been the cornerstone of the trail our country has blazed. As of last August, fintech was estimated to be worth over £7bn per year to the UK economy, with around 65,000 jobs being linked to the sector. And there is nothing to suggest that the Brexit vote has disrupted its inexorable upward curve either, with investment continuing to flow into UK fintechs from the Continent, and vice versa. However, as revealed in a recent article on Peer-to-Peer Finance News, a survey of 100 London-based tech startups showed that 33 per cent believe there is an insufficient number of skilled workers living within the M25 to fill new vacancies, while 30 per cent of respondents believe this skills shortage has already impacted their growth.”
Lending Works added:
“To what extent this is reflected specifically within fintech – and, within that, the peer-to-peer industry – across Britain at a wider level cannot be confirmed. But it is essential that, whatever the outcome of Brexit, these firms are not held back from acquiring the best talent the world has to offer, and are allowed to flourish so they can continue to bring the dynamism and innovation our economy needs.”