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|The true Brexit effect: One in three investors have been put off markets by EU result|
|Thursday, 08 September 2016|
One in three (30%) UK investors claim the outcome of June’s EU Referendum has put them off investing in most traditional asset classes, according to research from peer-to-peer lender ThinCats.
Since Britain voted to leave the EU, markets have been rocked by volatility, and a weaker economic outlook has led to a 0.25% 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% 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% of active investors saying they had pulled away from government bonds, while 9% had been discouraged from investing in equities.
Earlier this month, the Bank of England lowered interest rates to 0.25% 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 ThinCats study.
Two in five UK adults (39%) claim that sustained low interest rates have forced them to rethink their approach to saving, with one in five (20%) – 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% of investors claiming to have turned to the commodity to shore up security. Meanwhile, 9% of all investors say they are now more drawn to cash options while 7% see peer-to-peer lending as more attractive following the EU result. This trend was amplified among 18-34-year-olds, with 16% 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.”
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