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UK: Post-Brexit Vote Limbo Ever Clearer
- The resilience, if not rebound, in many high-profile UK economic indicators since the Brexit vote justifies the far less downbeat near-term outlook that DE projections have been pointing during the course of last two months. Even so, medium-term downside economic risks continue to be very pronounced.
- Moreover, not too much should be read into the apparent rebound in many survey results over the last month; recent consumer and business confidence surveys are anything but conclusive or authoritative.
- Both consumers and companies have begun to realize that any exit from the EU will be a very protracted and messy affair. This is especially so as those advocating leaving the EU actually had (and still have) no plans about how this would be brought about and with the new UK Government seemingly equally without any clear plan.
- Those same consumers and companies may therefore have undergone a recent and more positive reassessment, now realizing that things will not radically change for some time, maybe for many years.
- However, the UK is now in an economic limbo, a far from positive position but better than the economic hell that some thought would the case after the referendum.
- Regardless, business and consumer surveys show still-clear concern about the economy, this probably related to the unfolding pick-up in inflation that will damage real spending power and which will be the main medium-term threat to the economy through the coming year or so.