Eurosceptic papers have been quick to trumpet news of Britain’s economic boom following figures showing a significant boost to manufacturing. A more balanced perspective might not see things as quite so black and white. Though there has indeed been some welcome economic news this week, the reality is far more nuanced.
Calls for the government to make its negotiating strategy clear show just how many economic and political questions are still to be answered. Until they are, it’s reasonable to expect plenty of turbulence along the way.
Here are six highs and lows Brexit brought us this week:
1. The latest PMI figures show the joint largest month-on-month growth in manufacturing since the survey began 25 years ago, bolstered by the weak pound. Meanwhile, business confidence recovered slightly after its post-referendum low in July, but continues to show anxiety. Britain’s service sector looks less rosy, with the latest CBI survey showing increasing pessimism in Britain’s largest sector.
2. Figures from the Association of Graduate Recruiters show graduate vacancies have fallen by 8% this year, despite pre-referendum forecasts indicating an expected increase of 2%. Though some of the drop is accounted for by large employers boosting their intake through apprenticeships, the sharp decline also suggests that post-referendum economic uncertainty is taking its toll on young people’s prospects. Higher youth unemployment was considered a key incentive for young people to register to vote and support Remain in the referendum. One of the biggest recruitment firms, Hays, also reported a slowdown in the job market around the referendum, but noted that it was too early to read into longer term trends.
3. Brexit looks set to push up the cost of household energy bills as prices rise for the first time in two years. The Co-op recently announced that it was increasing rates by 3-6% for its customers. Though the “big six” are yet to follow suit experts note that the rising price of wholesale gas and the increased cost of energy imports driven by sterling’s post-Brexit fall are likely to push the purse strings this Christmas. The cost of leaving the EU’s internal energy market could push up prices further still, with pre-referendum forecasts estimating the cost of Brexit to be in excess of £500m per year.
4. Cosmetics company Lush announced that it would be hastening plans to relocate much of its core operations to Germany amid uncertainty for its migrant workers. Though many big businesses are waiting for further details of Brexit before deciding their fate, Warsaw became the latest city to court the City following a visit from Poland’s deputy prime minister. Paris, Frankfurt, Dublin and Amsterdam have previously expressed their eagerness to hoover up London’s booming banking industry.
5. Ryanair is to fly five million fewer passengers in and out of Britain next year as it become the latest airline to curb its UK activity following the referendum. WizzAir and EasyJet have previously announced plans to focus their business elsewhere as the UK market looks set to dampen after Brexit. Tim Alderslade, chief executive of the British Air Transport Association, also warned against the risks of Brexit to the air travel industry earlier this week.
6. The latest Lloyds Bank spending power report showed that concern over the UK’s economy reached 62%, an increase of 7% on the previous month, despite record levels of confidence in their own personal finances. Lending figures from the Bank of England revealed that consumer borrowing in July rose by £1.2bn, well below economists’ forecasts, suggesting that many consumers are adopting a wait-and-see approach given the economic uncertainty.
Edited by Hugo Dixon
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