Brexit Britain ends 2017 with a boom

FTSE 100 at all-time high £141bn lift for shares Deal- making at 3-year record

THE UK economy ended the year on a record high as shares rose on the back of a frenzy of deal-making.

More than £141 billion was added to the value of the country’s biggest firms amid a boom in exports, a rise in market confidence and a surge in stock market flotations.

The FTSE 100 index of the UK’s largest firms rose to 7,687.77 yesterday, topping the previous end-of-day high to finish the year at record levels.

It is the second year running that the market has ended December at a new peak, defying the gloom-mongers who predicted the UK would sink after the Brexit vote. The market has risen almost 8 per cent since the beginning of the year.

On top of this, the FTSE 250 index, which includes many UK-focused companies, also finished up for the year, and has seen £52 billion added to its value.

The past 12 months have seen a flurry of deal-making, with the number of companies floating on the London Stock Exchange at a three-year high of 106, surpassing all rival European exchanges.

The market was also boosted by a rise in the number of foreign firms choosing to list in London, with 20 North American busi- nesses choosing the City as the place to trade their shares.

Nikhil Rathi, chief executive of the London Stock Exchange, said: ‘Despite the debates about Brexit, London’s highly global, deep and liquid capital markets continue to be the ideal partner for funding the world’s growth.

‘We continue to be at the forefront of innovative global finance.’

One reason for the strength of the stock market in the past 18 months has been a fall in the pound.

In the immediate aftermath of the Brexit vote, the currency fell 20 per cent, making UK exports cheaper for foreign firms. In recent months it has climbed back to recover half its losses, meaning that despite weaker earnings, British companies have continued to thrive.

Despite hitting a high, the UK has lagged behind other global stock markets this year – particularly the US which has risen by as much as 30 per cent thanks to business confidence about Donald Trump’s tax reforms. It has also slightly underperformed against rival markets in Japan, Germany and France.

However, the UK has ended the year with a series of economic figures which have defied the experts’ predictions.

Last week, official figures showed that the economy has fared better than previously thought since the vote to leave the European Union. The Office for National Statistics said it grew at an annual rate of 1.7 per cent in the third quarter of this year, up from the 1.5 per cent it had previously recorded.

And in a set of unexpected revisions, the ONS upgraded its growth figures for 2016, thanks to a stronger six months following the referendum. The 1.9 per cent growth rate last year put the UK alongside Germany as the best-performing economy in the G7 in 2016.

The unemployment rate has also continued to set records, with the ONS saying unemployment has fallen to a 42-year low of 4.3 per cent.

Craig Erlam, market analyst for online trading group Onada, said: ‘As the year has progressed it has become clear that the economic downturn in the UK has not been as severe as some feared, while progress in the Brexit negotiations has provided hope for domestic stocks, benefiting FTSE 250 companies.’

Figures compiled by Reuters also showed that the volume of UK domestic deals surged to £51 billion this year, more than double the previous year. Deals included online gambling company GVC’s purchase of bookmaker Ladbrokes Coral for as much as £3.9 billion and Hammerson’s £3.4 billion acquisition of rival shopping centre operator Intu Properties.

Richard Stone, chief executive of the Share Centre, said: ‘Some market commentators have indicated concern that a correction may be on the horizon. However, the market appears to be... continuing to go from strength to strength.’

‘Going from strength to strength’