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The Brexit phoney war

Ten weeks after Brexit and the world has not yet ended. Billy MacInnes casts his eye over the figures proclaiming it is all slightly better business as usual

So, the good news is that SMEs have not felt any impact from Brexit. Not just SMEs, either. The performance of the manufacturing and services sectors in August were better than expected as well. All’s right with the world. Onwards to the sunlit uplands of an independent free-trade UK unshackled from the yoke of EU tyranny.

“Brexit, schmexit,” cry the leavers.

And you can’t argue with the figures. As Markit reports, business activity in the UK rebounded from July’s post-referendum decline to record “the strongest expansion for five months”.

Five months, eh? Sounds impressive, doesn’t it. That’s almost half a year. What else happened just over half a year ago? Oh, yes, Cameron announced the date for the EU referendum – 20th February to be exact. Does this mean August’s good PMI figures are the best since the figures for the month immediately following Cameron’s announcement of the EU referendum? Don’t suppose there’s a connection, do you?

According to Markit, “businesses across manufacturing, services and construction reported that business and consumer confidence had revived [in August], with an immediate impact on demand.” This confidence was helped quite a bit by a number of other factors, including the weaker pound, the establishment of the new government and the Bank of England’s “aggressive stimulus”.

All of which is good news but we have to bear in mind one important fact: everything that has happened up until now is merely a reaction to the UK’s decision to leave the EU, it has nothing to do with Brexit because, to state the obvious, Brexit hasn’t happened yet.

It might be worth noting that the Bank of England’s “aggressive stimulus” may have played a part in reviving confidence and alleviating uncertaintbut it has had to be deployed merely to mitigate the effects of the decision to leave the EU, not the actual event itself. That’s much further down the track.

No wonder service sector business confidence, while up on July’s “multi-year low”, is still “well below its long-run trend”.

Apart from the decline in the value of sterling, the vote for Brexit has had little or no effect on the UK’s day-to-day relationship with the EU and other countries. At the moment, it’s pretty much business as usual. No wonder people aren’t feeling any great impact so far. Nothing has happened.

Still, if the depths of July and highs of August are what life in the UK is like in the post-Brexit vote age when nothing has happened, it might make you wonder what life will be like when Brexit finally does occur.

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