Thursday, September 08, 2016

The Brexit bounce that’s making doom-mongers look foolish...

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There is just one problem with this line of argument: if your experts turn out to be wrong, you end up looking pretty silly. That is exactly where George Osborne and many of his fellow Remainers stand now. We haven’t yet left the EU, of course, and there could well be other economic shocks before we do, but the talk of immediate financial meltdown stands exposed as bunkum. The Financial Times, whose hysteria over the issue has led it to run a weekly doom-o-meter of economic data, has found the figures reporting fairly robust economic health.

True, there was an initial wave of panic when the referendum result became clear on the morning of 24 June. The stock market and the pound plummeted. That much really was inevitable, given what the Chancellor and the Governor of the Bank of England had said about the dangers of Brexit, and how completely the result caught the markets — along with the pollsters and the bookies — by surprise. Yet by the next Monday the FTSE 100 was bouncing back and over the following week it rose above its pre-referendum level. The FTSE 250, less stuffed with giant global corporations, took longer to rebound — but by the end of July it, too, was trading higher than it had done on the eve of the vote. Investors seemed to have come to a consensus of their own — one that flew in the face of Osborne and his phalanx of economists.

Then there was that awful interregnum after David Cameron announced that he had no plan for Brexit, and that he was resigning, and it looked as if there would have to be a months-long Tory leadership contest before anyone began to take charge. Surveys during that 18-day period would have produced gloomy results. No one felt able to challenge Mark Carney when he said that some risks of Brexit had ‘begun to crystallise’. Everything that the Remain camp had warned us about appeared to be coming true. Even the Brexiteers, few of whom ever denied there would be turbulence, seemed to be bracing-themselves.

Things are looking very different now. The indexes of business and consumer confidence that plunged in July seemed to surge just as much in August — a Brexit bounce. Full story...

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