UK Economy after EU Referendum

We keep hearing about the fall in the pound but what about the rest of the economy?  Both Service and Manufacturing sales have been growing strongly since the Referendum. The British Chambers of Commerce Quarterly Economic Survey shows that the rate of growth of Service Sales has been declining since 2014 but Manufacturing Sales have increased considerably since the Referendum:

 The continuing fall in the pound has been blamed on the EU Referendum even though the pound has been sliding for decades. The current fall in the pound began in 2014 as a result of terrible UK Balance of Payments data:

It is now becoming apparent that the Bank of England may have been partly responsible for the pre-referendum spike in the value of sterling and the post-referendum fall.

Had the Bank of England been interested in smoothing the fall in the pound we would have expected it to be buying pounds and reducing foreign exchange holdings in June and July to soften the effects of immediate post-referendum speculation. The Bank actually added to the fall in the pound.

The terrible UK Balance of Payments is a result of the UK being in the EU Single Market:

It is this continuous drain of national wealth into the EU that is causing the long term fall in the pound.  The pound has been greatly overvalued because of the flight of Euros into Sterling as a result of the Eurozone crisis and is now at its proper (PPP) level:

The various "Purchasing Manager's Indices" were used immediately after the Referendum to suggest that the economic effects of the referendum were negative but these indices have since not only recovered but risen strongly, suggesting that the decision to leave the EU is very positive for industry:

This recovery happened last month despite it becoming apparent that the UK will be leaving the Single Market.

New car registrations for September have risen:

Society of Motor Manufacturers and Traders

Retail sales have risen and and showed no change as a result of the Referendum:

and have grown throughout 2016.


Hate crime figures have fallen back to pre-referendum levels after the flurry of extra reporting as the press publicised Hate Crime.

Indeed, the sudden spike in hate crime reports in July looks like media stooges deliberately reported 50 extra crimes to get a headline.

The Predictions of Remain Economists are now Proven to be Wrong

The Remain economists are looking even more incorrect as time passes, it was the "Adverse Scenario" in the graph below that grabbed all the Remain headlines before the referendum:

This "Adverse Scenario" has not happened.  The IMF and other scenarios were about the Referendum result, not the technicalities of whether or not Article 50 is invoked.  Remain supporters attempt to explain the failure of Remain economists by saying that the UK has not yet invoked Article 50 but then, in the next breath, say that the fall in the pound is due to the "terrible uncertainty" of not yet invoking Article 50 and "having no plan". They cannot have it both ways.

There was wide agreement amongst Remain Economists that a Leave vote would cause such uncertainty in the year after the referendum that the fall in economic output would scar UK prosperity for decades to come:

Almost all the predicted damage to the UK economy is supposed to be happening now, in late 2016.

The red line in the graph above shows the IMF's predicted collapse of the UK economy in 2016-17. The IMF article makes no distinction between the effects of immediately invoking Article 50 or invoking Article 50 after a few months. The predicted collapse due to uncertainty is contingent on the Referendum, obviously invoking Article 50 and actual Brexit would reduce uncertainty so according to the "uncertainty" thesis waiting for a few months before invoking Article 50 should be the very worst option.


According to the IMF long term predictions, the UK economy actually grows faster after Brexit actually happens in 2019.  Of course, there has been no devastating collapse of the UK economy after the referendum so the IMF is left having predicted that Brexit will be excellent for the UK economy with stronger growth after 2019:

IMF Prediction Assuming no Post Referendum Panic

Many other Remain pundits repeated the IMF mistake.  Price Waterhouse Coopers predicted a massive meltdown due to "uncertainty" that has not happened:

PWC: Implications of an EU Exit

The PwC graph above is extremely sneaky. The data points are predicted cumulative effects so the recovery from 2019 to 2022 is actually due to strong growth happening after Brexit occurs (IMF had same prediction - see above)!

It is now absolutely clear that the Remain campaign was scaremongering. The only aspect of their campaign that was worse than this scaremongering was the way Remain supporters would adopt a beatific expression and declare that "I believe we should all live together and share our world without borders"; this belief, that eradicating all cultural and economic differences between people would be a "good thing", is deeply childish: adults believe in mutual respect and diversity, not central control and uniformity.  The EEC may have been a "good thing", based on cooperation, but the EU is not.

The UK Economic News has been good since the Referendum

The Bank of England has raised its forecast of economic growth for the third quarter of 2016 from a Remain Economist, pessimistic 0.1% to a buoyant figure of 0.3%.  As can be seen from the data below, this figure is likely to rise further.  There will be no recession. The IMF and PwC were wrong, even by Q3 the UK GDP is 0.2% higher than the IMF forecast for the year.

UK Employment has increased to its highest ever level:

UK Employment ONS Data

The IMF forecast falling employment.

Earnings have continued to grow at over 2%:

The FTSE 250 - the share index that reflects domestic share values - is near a 3 year high:

Manufacturing output and confidence have increased since the EU Referendum (despite a blip in July).


So, Remain economists got the economics of Brexit totally wrong, or they were trying to scare the People into being obedient.



Note 1: The PwC graph confuses many people because it is a graph of the cumulative predicted effect (ie: exaggerates the effect).  In particular, the first data point is for 2017 but consists of the predicted effects of what is supposed to happen in 2016.  The graph below uses the IMF data to show how the PwC graph was constructed:

Which, using the PwC data gives rise to:

Note 2: The IMF Data. Notice GDP already exceeds the IMF figure for the whole year by Q3 - the IMF predicted a collapse post-referendum.

17/10/16