IT’S OBVIOUSLY early days yet, but however you view it, the barrage of dire predictions from the anti-Brexit establishment has utterly failed to materialise.
Quite the reverse:
Britain seems to be thriving…
Employment is at a high, two thirds of the deficit has been paid down and the economy is still growing.
Just the other week, the closely-watched Markit/CIPS survey index of purchasing managers rose from 47.4 in July (its lowest level since the financial crisis) to 52.9 in August (the biggest monthly gain in the 20 years that this survey has been conducted).
Any figure under 50 implies economic contraction; a figure over 50 implies expansion.
This survey follows the same pattern as we’ve seen with other surveys since the Brexit vote, such as consumer confidence and manufacturing activity.
First, the sentiment of the surveyed people reflects what they were told by the establishment:
…that a vote for Brexit would dispatch the UK economy to Hell in a handcart.
But a month later, the realisation dawns that Armageddon has been postponed indefinitely and life goes on much as before.
After collapsing from $1.50 to $1.28 after the vote, sterling recovered to a two-month high of $1.34 the other week.
Meanwhile the cheaper pound was responsible for a drop in our trade gap in July from £5.6 billion to $4.5 billion, as exports rose and imports fell.
Interestingly, Bank of England governor Mark Carney claimed last week that the actions of his monetary policy committee – cutting interest rates and embarking on a new round of QE – were responsible for the robust post-Brexit-vote recovery.
If eight years of QE have failed to achieve any meaningful economic growth, does Mr Carney seriously expect us to believe that the Bank has saved us from economic collapse in just a few weeks?
If so, he is surely delusional…
…and he should get out from his Bank of England bubble more.
He would then find that, in the real world, there are no CEOs out there that are muttering to themselves:
“If Mr Carney would only lower interest rates by another 0.25% and launch another round of QE, I will build another factory.”
And he would also find that there are millions of pensioners and pension plan holders who are cursing Mr Carney for slashing the future value of their pensions, and causing banks to slash yet again the interest they pay on savings accounts.
Our take is that the Bank’s actions signalled a sense of panic by the establishment – panic not shared in the wider economy, where it has been business more or less as usual.
Of course, our little island is but a small piece of the global economy…
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