Since the vote to leave the EU on the 23rd of June there have been a number of reports in the media on the state of Britain’s economy.
On the positive side, the reports have included:
- a rise in consumer spending.
- a continuing rise in employment figures, in an article about some Brexit warnings apparently failing to materialise.
- a major house builder reporting a rise in profits
On the negative side, the reports have included:
- holiday costs rising
- the pound falling
- a drop in the purchasing managers’ index(a measure of manufacturing activity), especially pronounced in London and the South East
I have a few problems with these reports:
- We haven’t left the EU yet! The indicators at best indicate what the impact of the vote to leave has been, and will in fact be some combination of that and other factors. To the extent they reflect the impact of the vote, they will be indicating the uncertainty that has arisen as a result of the vote but prior to even the beginning of negotiations which won’t start until 2017.
- Some of the indicators are likely to be lagging indicators that will not yet show the impact of the June vote, e.g. figures relating to employment/unemployment will be showing mainly the impact of pre-vote decisions/factors.
- There’s huge amount of uncertainty that will persist until we know what the outcome of the negotiations with the EU will be.
To claim that predictions about the impact of Brexit, whether positive or negative, are now being proven true (or false) is thus extremely premature.