The true Brexit effect: One in three investors have been put off markets by EU result


Since Britain voted to leave the EU, markets have been rocked by volatility, and a weaker economic outlook has led to a 0.25 per cent cut in interest rates, with all three factors having a significant impact on people’s saving and investing habits.

In the last two months, 13 per cent of active investors claim they have steered clear of currency markets after the value of Sterling plummeted. Fixed income assets are also suffering, with 10 per cent of active investors saying they had pulled away from government bonds, while 9 per cent had been discouraged from investing in equities.

Earlier this month, the Bank of England lowered interest rates to 0.25 per cent in a bid to stimulate the economy following forecasts of a weaker outlook post-Brexit. This is also having a hugely significant effect on people’s money habits, according to the study by peer-to-peer lender ThinCats.

Two in five UK adults claim that sustained low interest rates have forced them to rethink their approach to saving, with one in five – the equivalent of around 9.5 million people – saying that they save less money as a result of the rock-bottom rates.

While many investment options are being avoided in the wake of Brexit, some assets have become more attractive, such a gold, with 14 per cent of investors claiming to have turned to the commodity to shore up security. Meanwhile, 9 per cent of all investors say they are now more drawn to cash options while 7 per cent see peer-to-peer lending as more attractive following the EU result. This trend was amplified among 18-34-year-olds, with 16 per cent claiming they are now more attracted to investing in peer-to-peer.

Kevin Caley, Founder and Chairman of ThinCats, said: “An unprecedented period of low interest rates combined with recent market volatility, heightened by the decision to leave the EU, has left many savers and investors scratching their heads about how best to use their cash.

“Alternative finance has come a long way in helping to plug this gap, offering some reprieve for investors, many of whom believed they’d be seeing a rate rise by 2017. In the last two months alone, our research tells us that many thousands of investors have started looking at peer-to-peer lending as a way of earning meaningful returns while avoiding the rollercoaster ride of volatile markets.”