Brexit Bear is a June Bruin

05 Jun 2017

The UK has fallen to the bottom of the growth league table of advanced economies after a particularly poor start to the year. Canada was the final member of the G7 to report its growth figures, which confirmed the UK as officially the joint worst performing G7 nation so far this year, level with Italy on growth of 0.2%.

Consumers don’t seem so bothered though, and borrowed £16.4bn on credit cards in April, a record high, according to Bank of England figures. After taking into account repayments, that added an extra £606m to households’ total credit card debts, which now amount to £130.3bn.

As to the future rather than the immediate past, The World Bank has upgraded its forecast for UK growth over the next three years. Economists at the Bank expect the UK economy to grow by 1.7% this year. This is only slightly below last year’s expansion of 1.8%, and up from a forecast of 1.2% in January. Growth for 2018 and 2019 was also upgraded to 1.5% a year, up from previous projections of 1.3%. The revisions were driven by expectations of stronger growth in advanced and emerging economies, with a recovery in industrial activity and a rise in global trade expected to lift output around the world, according to The Times.

Another study, reported in the Financial Times, has shown that manufacturing firms are enjoying a surge in performance amid “buoyant” demand from Europe. The survey found that three out of five manufacturers reported an increase in demand for goods from European markets. Orders were healthy, with the EEF now revising its forecasts upwards for the rest of the year and 2018, saying manufacturing was now expected to expand by 1.3% in 2017 and 0.5% next year.

That may or not presage a future Sterling crisis, but Manchester United CFO Cliff Baty has said foreign football signings are looking to get paid in euros rather than sterling in the aftermath of the Brexit vote.

Really, all the surveys in the world can’t “price in” either the quantum or the timing of the “Brexit effect” but maybe it helps to understand that things are looking pretty good, except for that elephant in the corner of the room…