Friday, July 22, 2016

So much for Project Fear - Bank of England officials admit the British economy has showed NO sign of slowing down in the month since the Brexit vote

  • Bank of England report reveals British economy shows no signs of slowing
  • Monthly survey finds most companies are continuing as usual post-Brexit
  • It flies in the face of warnings issued by Remain campaigners before vote 
  • 'As yet, there was no clear evidence of a sharp general slowing in activity'

The Bank of England last night faced fresh accusations of ‘scaremongering’ after admitting that businesses around the country have taken the referendum result in their stride.
In its first attempt to gauge the mood of firms since the Brexit vote four weeks ago, officials discovered most had adopted a pragmatic ‘business as usual’ approach.
The Bank of England had predicted that uncertainty both in the lead-up to and after the June 23 referendum would cause firms to put off hiring new staff and investing in their business. 
But monthly survey by the institution's agents – who are considered to be its eyes and ears on the ground observing the British economy – found that most companies were continuing with business as usual.
The study flies in the face of the dire warnings issued by Remain campaigners in the run-up to the vote, when there were widespread predictions the nation would suffer a devastating economic blow.
The Bank's agents found that there had been a marked rise in business uncertainty but most companies did not expect their investment or hiring plans to take a hit.
'As yet, there was no clear evidence of a sharp general slowing in activity,' the report said.
Chancellor Philip Hammond seized on the announcement as evidence of Britain's reslilience.
He said the figures were 'proof that the fundamentals of the British economy are strong'.
'As the economy adjusts to the effect of the referendum decision, it is doing so from a position of economic strength,' he said.
Exporters said they expected the weakened pound to have a positive effect on turnover.
However, the agents said fierce competition between supermarket chains and High Street retailers would mean many would look to prevent customers suffering from price rises caused by sterling's fall.
nd there was 'little evidence of any impact on consumer spending' – despite warnings that British confidence would take a massive hit after the shock result.
The report found little evidence of business pulling out of the UK, although some companies were expected to focus more on Europe for growth.
Some businesses even said they were looking to come back to Britain or find more domestic suppliers because of the lower pound.
The Bank's findings were supported by a trading report from the retailer John Lewis.
It said spending in its department stores and at Waitrose supermarkets was 3.2pc higher in the week ending July 16 than a year earlier.
Adam Tyler, chief executive of the National Association of Commercial Finance Brokers, said: 'This latest report from the Bank of England will provide considerable encouragement to the UK business community.
'The findings are certainly consistent with what we are seeing on the ground, namely that most businesses are carrying on more or less as normal.
'Businesses are monitoring events closely, especially news surrounding future trading relations, but the corporate paralysis some suggested has simply not materialised.'
The unexpectedly upbeat news suggests that Bank officials might decide not to push ahead with an interest rate cut next month.
Markets were widely expecting a reduction to counter the effects of a slowing economy, and Bank Governor Mark Carney has several times said he expected a stimulus to be needed.
But top policymaker Kristin Forbes, who will be one of those making the decision, said it was important to 'keep calm and carry on'.
Writing in The Telegraph, Ms Forbes said financial markets had 'stabilised' after an early 'panic'.
And she said there was no evidence 'consumers are cutting back'.
It follows an announcement earlier in the week by the International Monetary Fund that the post-Brexit hit to growth might be lower than initially thought.
After saying that leaving the European Union could trigger a UK recession, the International Monetary Fund now expects the British economy to grow by 1.7 per cent this year and 1.3 per cent next year.
That is weaker than the 1.9 and 2.2 per cent growth forecasts before the referendum, but the UK is still set to be the second-fastest growing economy in the Group of Seven industrialised nations this year – behind the United States – and third-fastest next year, behind the US and Canada. 


By Business Correspondent for the Daily Mail 
British households also shrugged off referendum concerns last month as they rushed to buy new homes.
Latest estimates from the Council of Mortgage Lenders showed almost £21billion was borrowed last month - the highest figure for June for eight years.
The dramatic surge came despite claims from the Bank of England that nervous families had been putting off ‘big ticket purchases’ before the referendum.
Last night, Eurosceptic MP John Redwood said the ‘doom-mongers’ at the Bank and the Treasury were being ‘forced to eat their pre-referendum words’.
In another boost to the economy, Government borrowing also fell to £7.8billion in the month of the referendum – less than forecast by economists and the lowest for a June since 2007.
Chancellor Philip Hammond said the figures from the Office for National Statistics demonstrated the ‘underlying strength of the economy’.
Even retailers who endured a fall in sales last month reported that shoppers were put off by wet weather rather than fears about the referendum, according to the ONS.
The largely upbeat report was published as ONS figures also revealed a record 31.7million people aged between 16 and 64 are in work after a dramatic surge in hiring ahead of the referendum.
John Longworth, the former boss of the British Chambers of Commerce, who was ousted after speaking out in favour of Brexit, said: ‘As I predicted, there will be a period of uncertainty in the financial markets but the real economy would be strong and continue as normal. All the indicators are that Britain is doing very well, thank you.’
Mr Redwood added: ‘Employment is at record levels, wages are rising and people are buying are buying homes. This shows that Britain is open for business – it’s business as usual.’

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