Britain’s exit from the European Union has so far had a limited impact on the UK economy, according to the latest report by the Office for National Statistics.
Immediate impact
The ONS highlighted the immediate impact of the Leave vote, mainly on the currency markets. The effective value of sterling depreciated 9.5 percent between the 24th June and the end of July, on top of the 7.3 percent fall over the 10 months ahead of the referendum. Since then however it has steadied and begun to rally.
Impact on real economy
Economic data throughout August has stayed relatively strong, with prices of material and fuel purchased by producers increasing in July and August at about the same rate as in the previous two months.
Factory and consumer figures have been positive, especially when compared to other countries in the EU such as Germany and Italy. Retail figures fell in the immediate wake of the result, but grew 1.9 percent in July. House prices maintained a strong growth rate in July, despite a slight fall in annual growth from 9.7 percent in June to 8.3 percent in July.
July’s flat construction output has not been seen as a cause for concern; it continues a trend of broadly flat output growth since the start of 2015.
Commenting on the figures, ONS Chief Economist Joe Grice said:
“As the available information grows, the referendum result appears, so far, not to have had a major effect on the UK economy. So it hasn’t fallen at the first fence but longer-term effects remain to be seen. The index of services published soon and the preliminary estimate of third quarter GDP, published at the end of October will add significantly to the evidence.”
Looking ahead
Key data released later this month will shed clearer light on the situation, including official figures for the service sector which are due next week. The ONS also highlighted the importance of the index of services output for July, published on 30 September and the preliminary estimate of third quarter GDP, published on 27 October.
The ONS report comes just after a warning by Bundesbank president Jens Weidmann that the UK economy is not in the clear just yet, with Article 50 still to be triggered and a post-Brexit deal still very uncertain.