U.K. economy shrugs off Brexit fears

[GennGreymane]

http://money.cnn.com/2016/10/27/news...xit/index.html

Whoa. That's what you call resilience.
The U.K. economy grew 2.3% in the third quarter, confounding forecasts that it would slump after the Brexit vote.

Quarter on quarter, GDP grew 0.5%. That's weaker than the second quarter, but nowhere near as bad as expected. The Bank of England was expecting growth of between 0.2% and 0.3% in the July to September period.

"It could be that the economy is in a post-referendum 'sweet spot' whereby some of the positive developments since the vote, such as action by the [Bank of England] have been felt before the major adverse consequences, such as a rise in inflation," said Ruth Gregory, U.K. economist at Capital Economics.

The central bank cut interest rates and revived its stimulus program in August in a move to prevent the economy sliding into recession after the U.K. voted to leave the EU, its biggest trading partner.

The Office for National Statistics said strong growth in services offset falls in other industries. While services grew 0.8% quarter on quarter, construction plunged 1.4%, and manufacturing declined 1%.

Analysts said the robust growth figures were likely supported by consumer spending, helped by a sharp fall in the value of the pound which was encouraging overseas visitors to spend more freely.

But they cautioned that it was too soon to sound the all clear for the world's fifth biggest economy.

"We expect the economy to suffer in 2017 as the uncertainties facing businesses and consumers are magnified by the triggering of Article 50," said IHS Markit chief economist Howard Archer, referring to the official start of Brexit negotiations.
uk markets ahead

The government has started to unveil its Brexit plans in the last few weeks. Talks with the EU will begin before March 2017 and the actual exit will happen two years later.

But there are still no details about how the government plans to approach the negotiation and what kind of trade deal will it seek.
European leaders have made clear that if Britain does not allow free movement of EU citizens across its borders, it will lose some of its rights to access the free trade area.

U.K. Prime Minister Theresa May indicated she will give priority to controlling immigration over market access, the so called "hard Brexit" option. That would mean British businesses could lose the ability to do business freely across the region.

[Mafic]

Brexit has many drawback implications for labor movement (eg workers finding work or going to school) but beyond that it is a net positive for the U.K. economy.

[Deleted]

A flame burns brightest before it burns out. Let's see what happens once the net inflation/exchange effects kick in and supply contracts are renegotiated at worse terms of trade.

[Aggrophobic]

The UK's still in the EU though.

[Pann]

So despite growth being down on the second quarter and manufacturing and construction both taking hits we've apparently shrugged of Brexit fears?!? I don't think the title matches the article's content.

[Deleted]

"U.K. economy shrugs off Brexit fears"

"But they cautioned that it was too soon to sound the all clear for the world's fifth biggest economy."

Nice title

[Deleted]

We haven't gone out yet...so what Brexit?

[Ryme]

Too early to call anything, we'll need at least a year after article 50 is invoked before we can get a feel of how things are going.

[Kalis]

Too early to call anything, we'll need at least a year after article 50 is invoked before we can get a feel of how things are going.

People are too impatient to wait for medium term results like that, they want their definitive answer now.

You can't even really judge the effects of Brexit that early, 10-20 years is more relevant.

[ranzino]

Too early to call anything, we'll need at least a year after article 50 is invoked before we can get a feel of how things are going.

the invocation in march 2017 should have an effect very soon, rather than a year later.

[TrumpIsPresident]

Too early to call anything, we'll need at least a year after article 50 is invoked before we can get a feel of how things are going.

You'll be fine, you'll be better than fine.

My prediction is that the UK is going to enjoy a snowball effect of economic success.

I read that small-medium businesses financing requests exploded after the withdraw vote and that the banks are more than happy to help out because they know the many gains to be had.

[Kalis]

the invocation in march 2017 should have an effect very soon, rather than a year later.

As we don't know how negotiations will go, any market volatility prior to negotiations even being completed is not going to be an indicator of anything other than markets are volatile.

[Rend Blackhand]

'Local lefties who think they know better than the peasantry are shocked to discover that Armageddon has not come to pass'

The whole remain campaign message was just doom and gloom with David Cameron predicting world war 3 as well and even getting Obama to try and threaten the British people with the whole 'back of the queue' thing and it all came to nothing.

Britain will be absolutely ok and probably better off after Brexit happens.

[Kalis]

You'll be fine, you'll be better than fine.

My prediction is that the UK is going to enjoy a snowball effect of economic success.

I read that small-medium businesses financing requests exploded after the withdraw vote and that the banks are more than happy to help out because they know the many gains to be had.

The most likely long term scenario is that Britain will be slightly worse off economically than it would be if it stayed within the EU, neither doom & gloom, nor cause for celebration.

Basically it is probably all going to be pretty meh for most people and an epic waste of effort. Whoopee!

[Spectral]

Likewise:



As we all know though, this will definitely end badly - what kind of ignorant bigot would believe that the United Kingdom could exist as an independent nation?

[Ryme]

You'll be fine, you'll be better than fine.

My prediction is that the UK is going to enjoy a snowball effect of economic success.

I read that small-medium businesses financing requests exploded after the withdraw vote and that the banks are more than happy to help out because they know the many gains to be had.

I really hope so, the £ looks at least stable for the moment, but I don't expect that to last going further into negotiations.

the invocation in march 2017 should have an effect very soon, rather than a year later.

Yeah but panic effects aren't very useful to analyse.

[Independent voter]

Once all the decisions are finalized the markets will stabilize.

The day after notice is given don't look at your retirement fund.

[Felnoire]

Till there is an actual arrangement on how the exit from the EU will work, such as access to the single market, etc. There is nothing but uncertainty as to what the market will look like in the post exit Britain, and the longer that uncertainty is allowed to remain unchecked the likelihood of market losses increases as investors hate uncertainty for the most part. They want nice simple forecasts on which to plan out their economic future, right now the UK is in the limbo stage.
The most likely outcome that will continue to secure a stable economic future is going to have leave voters scratching their head on what exactly did they vote for. As the EU has made it clear access to the single market will come with freedom of travel, which means the very thing a fair few campaigners made a big point, EU migrants, will still be a thing post brexit.
Though one can't discount the option of what is defined as a hard exit, which is likely to cause economic instability which will hurt the industrial parts of the UK that benefited a lot from being in the EU (and yet voted leave anyway). Though as manufacturing for the most part is not the heart of the UK's economy, it'll only add a few hundred to a thousand unemployed factory workers as businesses move back to mainland Europe to continue to reap the advantages of operating in an EU nation. How the financial sector handles a hard brexit will be far more serious for the UK economy, as EU nations, especially the French from the last reports I recall would seek to pull EU financial interests back into the EU with the French hoping to plant it in Paris.
Which is frankly a bleak prospect for British economic stability, even if I doubt this path will be taken. Politicians aren't about to alienate their potential voters by being seen as the ones responsible for such an outcome, even if it means alienating those that are hoping for a hard exit. Still a political gamble, but it's a hedged bet compared to going full on into a hard brexit policy considering it's potential to harm more than benefit the country.
But then these two vague scenarios don't cover all possible outcomes, but it's still likely to end up in a fair few places losing jobs just due to the EU funding drying up after 2020.

[May90]

Brexit technically hasn't happened yet, so I wouldn't make any conclusions based on this. Let's see what happens once the UK actually has quit EU!

[Aeula]

The economy will bounce around a bit. Especially when/if we leave the single market. But it's definitely not going to be the doomsday they tried scaremongering us with.