Economists who supported Remain in the EU Referendum were widely predicting that the turmoil due to uncertainty after the EU Referendum would wreck the UK economy. Did it happen?
The surest sign of people expecting economic ruin is a run on the stock exchanges:
The orange dot marks the date of the EU Referendum. Nothing of any consequence happened as a result of the Referendum except some speculative selling on the day after which was recouped rapidly. The EU Referendum had the same sort of effect as normal fluctuations.
The FTSE 250 experienced more speculation but is now also back on course.
Perhaps no-one will buy UK Government bonds?
This looks more likely but Gilts have been falling for the past two years. The falls have been experienced globally, and gilts have performed worse in Germany than in the UK:
Falling Gilts have nothing to do with EU Referendum.
But what about the pound?
The pound has been overvalued in recent years because of the flight of cash from the ongoing Eurozone crisis. The green line in the graph above is the value that the pound should achieve based on economic performance. It seems as if the intention to Brexit has returned the pound to values that favour export growth. However, this fall had been happening since 2014 and was only hastened by the EU Referendum.
It is now very clear that the central plank of the Remain campaign, that the uncertainty after a vote to Leave would wreck the economy was nonsense.
The Referendum has also been blamed for falling Commercial Real Estate (CRE) values. However, the CRE market was overheated in 2014 and has been falling ever since. It is not falling specifically as a result of the intention to leave the EU and CRE values are still high. Heavy investment by overseas investors in UK property is not good for the economy because it leads to a large Primary Income Deficit, which is a measure of Rents, Profits etc. that foreign companies send abroad. The Primary Income Deficit drains the country of wealth.
Business confidence is also on its pre-referendum trajectory:
Remain economists also "predicted" that we would be a bit poorer in 15 years time if Leave won. No economist could make an accurate prediction over a 15 year period. Very, very few economists predicted the Financial Crisis in 2003 when it was only 5 years away! Furthermore, the Remain economists predicted turmoil after the Referendum that never happened so are proven to be wrong already.
We know that the global economy is currently very dubious, with Chinese growth stalling and world trade failing to expand. It would be very easy for Remain journalists to invent stories about the economic distress caused by these events being due to the Referendum. Such journalists would be the enemy of their neighbours and friends, damaging the UK economy out of spite.
19/7/16
The surest sign of people expecting economic ruin is a run on the stock exchanges:
The orange dot marks the date of the EU Referendum. Nothing of any consequence happened as a result of the Referendum except some speculative selling on the day after which was recouped rapidly. The EU Referendum had the same sort of effect as normal fluctuations.
The FTSE 250 experienced more speculation but is now also back on course.
This looks more likely but Gilts have been falling for the past two years. The falls have been experienced globally, and gilts have performed worse in Germany than in the UK:
Falling Gilts have nothing to do with EU Referendum.
But what about the pound?
The pound has been overvalued in recent years because of the flight of cash from the ongoing Eurozone crisis. The green line in the graph above is the value that the pound should achieve based on economic performance. It seems as if the intention to Brexit has returned the pound to values that favour export growth. However, this fall had been happening since 2014 and was only hastened by the EU Referendum.
It is now very clear that the central plank of the Remain campaign, that the uncertainty after a vote to Leave would wreck the economy was nonsense.
The Referendum has also been blamed for falling Commercial Real Estate (CRE) values. However, the CRE market was overheated in 2014 and has been falling ever since. It is not falling specifically as a result of the intention to leave the EU and CRE values are still high. Heavy investment by overseas investors in UK property is not good for the economy because it leads to a large Primary Income Deficit, which is a measure of Rents, Profits etc. that foreign companies send abroad. The Primary Income Deficit drains the country of wealth.
Business confidence is also on its pre-referendum trajectory:
Remain economists also "predicted" that we would be a bit poorer in 15 years time if Leave won. No economist could make an accurate prediction over a 15 year period. Very, very few economists predicted the Financial Crisis in 2003 when it was only 5 years away! Furthermore, the Remain economists predicted turmoil after the Referendum that never happened so are proven to be wrong already.
We know that the global economy is currently very dubious, with Chinese growth stalling and world trade failing to expand. It would be very easy for Remain journalists to invent stories about the economic distress caused by these events being due to the Referendum. Such journalists would be the enemy of their neighbours and friends, damaging the UK economy out of spite.
19/7/16
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