Most sane people would agree that in the last couple of months after Britain’s EU referendum a good 90% of all economic indicators for the UK economy have been pretty abysmal. And this is before Article 50 of the Lisbon treaty, the one where the UK formally notifies the EU Commission of its intention to leave, is even triggered yet. Those who shouted for Brexit loudest just call this sour grapes rationalization. They’d rather engage in their own favourite version of selective perception called sweet lemon rationalisation. For extra effect leading brexiteers like Dan Hannan retweet any glimmer of positive economic news under the hashtag #despitebrexit and for extra effect add #projectfear was based on lies etc. An unexpected upturn in the UK’s manufacturing index serves as a good example of this behaviour.
I hate to rain on your parade dear kippers, but there is a perfectly logical economic explanation for a short term revival of things like UK retail sales in July and UK Manufacturing exports in August.
First of all I would venture that the spike in UK retail sales were mainly driven by foreign tourists making good use of a rapidly decreasing pound and an increasing number of closing down basement bargain sales’. There was a good example of this when a London dealer in expensive old whiskeys decided to get rid of a lot of stock while it was still worth something and before Brexit would add 50% in export tariffs to whiskey exports to the EU. Was this really a reason to be cheerful about Brexit?
Also supermarkets may have not have increased prices in the immediate aftermath of brexit because they, like wholesalers have plenty of pre-brexit stock bought with a pre-brexit strong pound. They can afford to keep up the pretence that prices won’t rise after brexit until it’s time to replenish those empty warehouses. For a country that imports roughly 60% of what it consumes, that is the moment of truth when higher prices will start to hit UK consumers lulled into this false perspective that ‘they need us more than we them’.
Sure, they’ll trade as Dr. Ruth told us ad nausea, but they want more Sterling for their wares priced in dollars and Euros and guess who’s paying? You suckers!
Also in the stock markets and the housing markets we’ve seen temporary ups after weeks of downs. This is a natural effect of the sharpest of speculators with ‘short positions‘ taking their short term profits profit while gullible followers get tricked into dipping their toes in the market once more (only to get burned again a few days later). Also kippers are not aware that the UK FTSE share index is priced in sterling and that sterling is now worth 10% less, representing a net loss for overseas investors.
I am sure this post, like the man milk produced by Dan Hannan (still touching his EU MEP salary), will all go over the heads of your average disenfranchised ukip brexit voter. So I made a picture for them. With your brexit vote you threw the UK’s economy spinning into the water while humming your stupid nationalistic dam buster songs. Believe me, these short lived upward bounces you see are as predictable as a skipping stone. You all know where they eventually end up right?