Saturday, September 22, 2018

Back in January there was a burst of exuberant talk from Brexiteers about the supposedly booming British economy.

They pointed to surprisingly robust official GDP figures immediately after the referendum vote and forecasts for 2 per cent plus growth to follow in 2017.

“Britain has world’s top economy after Brexit,” blared the front page of one newspaper. The doomsayers and “experts” who forecast that a leave vote would be a negative shock to the UK economy had been proved spectacularly wrong, we were informed.

Things look rather different now. The growth figures for the second half of 2016 were revised down last week by the Office for National Statistics.

That “mini-boom” turned out to be a mirage.

And the most recent data shows an expansion for the UK in the second quarter of 2017 of just 0.3 per cent, the lowest in the G7.

Forecasts for full-year 2017 growth have also been tumbling. The IMF confirmed its latest downgrade on Tuesday. Expect the Treasury’s own forecaster, the Office for Budget Responsibility, to follow suite at the November budget.

It happened later than analysts thought but the negative economic impact of the Brexit result is undoubtedly now being felt in the form of weaker consumption by households in the face of higher inflation and falling real wages.

Firms are sitting on their hands rather than investing as fears grow of what trade arrangements they will face after March 2019. Hardly surprising given ministers are again talking about the possibility of a disastrous “no deal” scenario.

Perhaps the biggest disappointment for Brexiteers, though, is the poor performance of exports.

Many of them had said that the pound had been overvalued anyway before the referendum and that the record “correction” in the value of the currency on the night of 23 June 2016 would be a great boon for manufacturers.

Some, including Nigel Farage, suggested we would enjoy an export boom similar to the one that followed our ignominious departure from the European Exchange Rate Mechanism in 1992.

It has not materialised.

Data on Tuesday showed a record trade in goods deficit for August.

Brexit Britain is setting economic records. But not the ones supporters of leaving the EU wanted.