Existing pre- referendum deals were still a huge factor in the growth numbers now being published. Retails Sales are not falling, they are plummeting, there are slow down in construction, and manufacturing industry. The sterling is down on the FX. Next quarter will show a different picture. Any smart business are downsizing their orders until they see stability, which scaling back projects = lost jobs. Even the IMF has decreased Britain's growth percentage. Loosing access to 'single market' will affect them more and more. I'm sure the Bank of England is prepared for the punch. I wonder what Britain will be pitching at the G20.
It's time for the Brexit bears to calm down
Allister Heath
1 September 2016
The Telegraph
The vast majority of City economists thought that the sky would fall in after the Brexit vote Credit: AFP/Getty Images
Funny, that. The “experts” were not just a little bit wrong but horrendously, hopelessly so.
The
Markit/CIPS Purchasing Managers’ Index (PMI) jumped to a 10-month high of 53.3 in August, after tumbling to a three-year low of 48.3 in July in the immediate aftermath of the Brexit vote; it was the biggest month-on-month surge in a quarter of a century and one that confounded the doom-mongers, yet again.
Yet not a single one of the well-paid economists polled by Bloomberg even came
close to predicting the extent of the rebound, driven in part by the lower pound: just three forecast any growth at all (a modest rise to just 50.5, as it happens, which at least got the direction of travel right).
The forecasters are on another planet from those they are trying to understand, consumers as well as businesses.
The vast majority of City economists thought that the sky would fall in after the Brexit vote, with some going as far as predicting another Lehman Brothers-style financial implosion.
Many were expecting – and some are still actually predicting – a technical recession, an eventuality that now looks unlikely. Even commercial property funds, which are set up in a fragile way and were badly hit in the immediate aftermath of the vote are now recovering.
The credit markets are fine, as is inter-bank lending and all other key indicators of financial stress. Gilt yields have fallen further.
Of course, not all is going swimmingly: the economy has been doing all right but not brilliantly for a while now, irrespective of the Brexit vote.
Some parts of the economy are continuing their longer-term slowdown, including property transactions which are suffering from stamp duty, the tax attack on buy-to-let, an array of tax hikes aimed at wealthier foreign buyers and an
over-valued London market.
The new crop of perma-bears in the City need to calm down Credit: Bloomberg
The manufacturing PMI had been on a downward trend for a while. It is also obviously true that there has been some sort of Brexit shock, and many companies are worried. Growth will undoubtedly be hit: the figures imply a rebound from excessive, irrational pessimism, not a boom.
It is also worth putting the UK numbers into an international context. Britain’s reading was substantially above the final eurozone manufacturing PMI for the month, which fell a little to 51.7.
The UK did far better than France, which fell to 48.3 (yes, being an EU member-state is no economic panacea, for those who may not have noticed the economic history of the past 20 years).
Britain also did much better than the US, where the ISM manufacturing slumped to 49.4 from 52.6. It ought to be obvious, but for some reason wasn’t, that one can vote to leave the EU and do much better than countries that are choosing to remain (or of course that have little or nothing to do with Europe at all).
There are two key messages from the latest figures. First, the new crop of perma-bears in the City need to calm down, and fast: they shouldn’t allow the fact that they didn’t want, predict or like Brexit to cloud their judgment when it comes to understanding what is actually going on in the economy.
Second, it’s equally important that people such as myself – who cannot wait for Brexit to become a reality – don’t get carried away by this and other positive data.
For a start, there will be lots more data, and some are bound to be bad. The construction and services numbers will be worth watching; and then real, hard figures (though, of course, those will be revised for years to come).
I can understand why Brexiteers would be tempted to gloat. They were ridiculed, demonised and accused of having destroyed the economy by some Remainers in the ugly, hysterical days immediately after the vote. But the fact that some Remainers behaved appallingly is no reason for Brexiteers to do the same.
It’s time to focus instead on what really matters, and that means getting the Brexit negotiations right, not one or other survey or data snapshot.
It's time for the Brexit bears to calm down
