Brexit is easing the UK into recession like an old man lowering himself into a hot bath – Business Insider
LONDON — Ever since the
Brexit cliff failed to emerge, Leavers have been celebrating.
The UK economy continued to grow after the referendum vote to
exit the EU a year ago. The Remainers were wrong: Apparently, we
can have a strong economy without being attached to the EU.
But now, with the first three months of the two-year Article 50
period gone and no concrete progress to show, we’re starting to
see economic data that backs up the theory that
the Brexit cliff will be more of a gentle, downward slope:
- Business confidence is in decline.
- The Purchasing Managers’ Index (PMI), a measure of intended
business activity, is trending down.
- And new car sales are in decline.
- There is one thing that has gone up: the amount of cash
businesses are storing in overseas bank accounts.
These are not good signs for the economy. True, it is not a
crisis. But we’re now at risk of the recession engulfing us
gradually, like an old man lowering himself into a hot bath,
getting used to it as he goes along.
GDP growth was 0.2% quarter-on-quarter in the most recent period.
That’s depressingly totemic because 0.2% is the same amount
Brexit might cost us. According to the CBI, the extra tariffs on
exports to the EU post-Brexit will slice between £4.5 billion and
£6 billion annually from UK GDP, or 0.2% to 0.3% per year.
To put it bluntly, does this look like a healthy economy to you?
Here are the PMIs, which closely track GDP:
None of the individual PMI sectors are trending upward:
And big-ticket consumption is trending down, too. Here’s the
chart for new car registrations:
On top of that, businesses are storing capital overseas. Foreign
currency is worth more against the pound after all …
… and you might also get more growth for your money in the EU,
which is trending up just as Britain tanks:
Prediction: As we head toward 2019, expect more business leaders
to start talking more loudly about the economic cost of
unhitching ourselves from our biggest single trade partner.