It is still a little too early to say for sure that George Osborne’s gloom-laden economic forecasts for post-Brexit Britain were bunk. But never mind the future, it now emerges that he wasn’t much good at telling us what was happening in the present.
Throughout the referendum campaign he could barely disguise his contempt for the whole exercise, telling us that the UK economy was suffering from the mere fact we were having a vote. A week before referendum day, for example, he told us that ‘The economic uncertainty that the ‘Leave’ campaign carelessly insist won’t be caused is already being seen.’
Whatever he was seeing, it didn’t reflect reality. The growth figures for the second quarter released today reveal that in fact the economy grew by 0.6 per cent, up on the first quarter and higher than many were predicting. Annualised growth is at a healthy 2.2 per cent. Far from being frightened by the prospect of Brexit, businesses carried on investing, hiring and expanding. This was especially true of manufacturing, a sector which might be expected to suffer more than most from exclusion from the single market, were that to happen. Manufacturing had an especially strong April. With the fall in the pound, it will very likely have an even better summer.
What happened in the second quarter is of course not much of a guide as to what will happen in the third. It is possible to argue that businesses didn’t believe that Britain would vote for Brexit – the polls for a long time suggested they wouldn’t – and therefore based their investment decisions on the assumption of a ‘Remain’ vote.
But there is a lot evidence that the post-Brexit economy is not panning out as Remain’s doom-mongers predicted. GlaxoSmithKline, which had campaigned for Britain to remain in the EU, yesterday announced £275 million of new investment in the UK. Its worries about finding it harder to recruit scientists from the EU seem to have been outweighed by its liking of Britain’s low-tax environment.
Taylor Wimpey, too, announced yesterday that housing sales since the Brexit vote have gone better than expected. The Remain camp’s warnings of a drop in foreign investment sit rather awkwardly with Softbank’s offer for microchip manufacturer ARM.
There are some negative indicators, too, such as the Purchasing Manager’s Index – which has dipped below 50, which is supposed to indicate a shrinking economy. But it would be a rash call to put your money on the recession which on the morning of 24 June some commentators were saying was now ‘inevitable’.
Comments