For UK investors – and indeed the public generally – Brexit tops the list of concerns.
That is to be expected of course, given the importance of our relationship with the EU.
Unfortunately, it seems like the only difference between what we know now and what we knew in June 2016 is that we are further along the knife-edge.
We profess no special knowledge about the political whirrings of Westminster or Brussels.
To assess the likely impact Brexit could have – and has already had – on the British economy, we first need to understand the state the economy is in.
The positive(ish) scenario
Let’s take a step back.
At the beginning of the year, the UK economy was far from hopeless.
Yes, Brexit uncertainty had soured business confidence and investment. This was clearly seen in the data on growth, wages and inflation at the time.
But we felt the assumed apocalyptic scenario was off the mark, and that there were enough bright spots to keep Britain ticking along, albeit slowly.
Two positives particularly stood out: the health of manufactured exports and the tightness of the labour market.
The low value of the pound has been a positive for manufacturers ever since the referendum result, making their prices more competitive internationally.
Historically low unemployment suggested consumer confidence and consumer demand should remain high – even if Brexit stalls wage inflation.
These factors were even enough to keep the Bank of England insisting it would likely raise interest rates, though we and many others thought this was always unlikely.
Sure enough, for the first half of 2019 this positive(ish) scenario seemed to pan out.
Even the housing market – which has been lacklustre at best for the last few years – managed to overcome Brexit fears and underlying structural issues to see growth.
Prices rose around 2 per cent in the first six months, with regions outside of London and the South-east above 5 per cent.
This was undoubtedly supported by low mortgage rates and the confidence of the British consumer, who stayed relatively upbeat despite the business sector doing the opposite.
The turning point for consumer confidence
However, all good things come to an end.
As we went into the summer and the rain came, it became clear that consumer confidence was dropping off.
Despite employment figures remaining high, this drop-off in consumer confidence was driven by ever more aggressive politics, which only served to worsen Brexit fears and an already dreary business outlook.
House prices subsequently failed to stay on their upward trend, and consumer demand fell considerably.
Businesses, which were already pessimistic over Brexit, downgraded their outlooks even further on the back of this weak demand.
That brings us to the present.
The September PMI indicator measuring business sentiment for the services sector came in at just 49.5 – indicating contraction and below the expected 50.3 (50 marks the watershed between growth and contraction).
What makes that reading worse is it shows a downward trend from the previous month’s 50.6.
Manufacturing, meanwhile, is not picking up any of the slack. The reading here was 48.3 which, despite being above expectations, makes for a fifth consecutive month of contraction.
Business is clearly struggling, despite a big discount in the value of pound sterling.
The situation has forced the Bank of England to give up on its desire for higher interest rates and admit its next rate move is likely to be a rate cut.
This admission even came from Michael Saunders – the most hawkish member of the Bank’s Monetary Policy Committee.
Our central bank is reluctantly acknowledging that serious measures are needed to steer away from the recession we may already be in.
Of course, recognising the economic challenges we face is not the same as ringing the bell on the economy.
Recent data has undoubtedly been disappointing, but the economic fundamentals have not changed too much.
Despite the struggles of manufacturers, the low value of pound sterling is still a boon for exporters, even if they are worried about Brexit.
The likely reason we haven't seen much demand for British goods is the weakness of the global and European economies.
If this was to change – and some extension or suitably soft Brexit deal was secured – Britain’s exporters, manufacturers and service providers would be well placed to take advantage, leading to an economic rebound.
However one of the key things to note is even if Brexit was resolved in the best possible way (in terms of trade policy), we shouldn't expect it to be plain sailing economically.
Unfortunately, the work done by the Bank of England suggests the contagion of the damage will affect our ability to rebuild economic confidence.
In such a scenario, both business and consumer demand would likely take some time to rebound, regardless of the outcome.
The entire Brexit process has probably affected the economy and the UK consumer more deeply than any quick fix can solve.