RSM Stress Index drops again as economic strain eases

The RSM Stress Index, a measure of Brexit-related economic volatility, has continued its downward trajectory finishing 0.16 points below zero.

Brexit stress index april 2019

Overall, stress levels have declined in 14 of the past 19 weeks since its December 2018 peak, with the financial markets now signalling a period of normality in terms of asset price movements and volatility.

Commenting on the findings, Simon Hart, lead Brexit partner at RSM said:

'The latest results from the RSM Stress Index indicate an easing in the political turmoil ahead of the Easter holiday weekend. 

'This return to normality seems most likely a response to the political stalemate ahead of the EU and local elections, with the markets placing their bets on a soft exit or perhaps a second referendum.

'The pound continued to trade sideways, losing a bit over the course of the week but with volatility dropping again for the fourth week in a row. 

In the equity market, the FTSE gained 38 points, with volatility dropping for the fourth week in a row.

'With political hostilities resuming this week, we shall see whether this period of relative calm will continue.'

The RSM Brexit Stress Index tracks the weekly performance of six variables – the pound/euro exchange rate, the volatility of the pound/euro exchange rate, the performance of the equity market, the volatility of the equity market, the yield curve spread and the corporate yield spread. 

These variables are combined into a single measure and assessed against a baseline 'normal' level of stress in the economy. The baseline zero score indicates neither an increase or decrease of stress in the system. The index is designed to give forward-looking investors, business executives and policymakers an instant snapshot of the economic impacts of Brexit. 

Brexit - time to plan

There is no doubt that Brexit will have far-reaching impacts, with reverberations felt across every sector. Many in the business world will understandably be concerned.

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