BrExit UK Economic Collapse Evaporates, GDP Forecasts for 2016 and 2017
Economics / UK Economy Sep 07, 2016 - 05:57 AM GMTBy: Nadeem_Walayat
Its now two months on from when the establishment elite prophesied a post BrExit economic collapse apocalypse, however subsequently a stream of economic data on the UK economy continues to paint a picture that is a the exact extreme opposite to that which the establishment and their vested interests had propagandised both before and immediately after the EU referendum vote, a message literally warning of economic collapse as the following warnings of doom from David Cameron, George Osborne and Mark Carney illustrate and that which many still blindly cling onto to this very day despite reality starting to dawn of a UK economy that is literally soaring into the stratosphere by recording unprecedented gains across several economic measures into and during the month of August.
“Almost everyone now agrees, from the Governor of the Bank of England to the IMF, the OECD to the Treasury, 9 in 10 economists to, yes, even some Leave campaigners, there would be an economic shock if we left Europe. Let’s be clear what that means. The pound falling, prices rising, house prices collapsing, mortgage rates increasing, businesses going bust, and unemployment going up. In other words, a recession.”
- David Cameron
“If we leave the European Union there will be an immediate economic shock that will hit financial markets... That affects the value of people’s homes and the Treasury analysis shows that there would be a hit to the value of people’s homes by at least 10 per cent and up to 18 per cent." - George Osborne
“Brexit represents the biggest domestic risk to financial stability” - Mark Carney
As ever academics tend to be stuck looking in the rear view mirror as the doom merchants latched onto the Purchasing Managers Index data release for July that had fallen to 48.3 where a reading below 50 implies economic contraction) which vested interest academic economists that populate the mainstream press confirmed the start of severe imminent economic downtrend, a recession early warning as illustrate by the FT in early August
FT - Post-referendum UK manufacturing PMI deteriorates
The UK manufacturing purchasing managers’ index (PMI) fell to 48.2 in July, down from an initial reading of 49.1. That’s the worst pace of contraction since early 2013. Levels above 50 indicate expansion.
Last week, Markit said the initial reading showed “a dramatic deterioration in the economy” in the wake of the Brexit vote.
However, the PMI release for August instead of continuing to collapse into a BrExit void and thus feeding the establishment elites vested interest economists propaganda message instead did the EXACT OPPOSITE by soaring by 5 index point to a reading of 53.3 the largest rise in the indexes 25 history that sent sterling soaring and economists scrambling to cover their backs as real world economic data made a mockery of that which they pass as economic analysis regurgitated across the mainstream press. With the latest data release C-PMI showing that the services sector literally boomed during August with the index rising from 47.4 in July to 52.9, far beyond the 50 that academics had penciled in barely hours before today's data release, the largest rise in the indexes history which again prompted sterling to rocket higher to a post Brexit high.
Find out what this means for the UK economy for 2016 and 2017 in my latest video analysis on the implications of BrExit.
By Nadeem Walayat
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Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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