Brexit deals heavy hit to UK economy but eurozone holds up

[rooster59]

Brexit deals heavy hit to UK economy but eurozone holds up

DANICA KIRKA, Associated Press


LONDON (AP) — Britain's economy appears to be shrinking at its fastest pace since the global financial crisis as a result of the vote to leave the European Union, but the rest of the region is holding up, surveys showed Friday.

The findings come as global financial leaders meeting in China identified the uncertainty generated by Britain's decision to exit the EU, the world's biggest economic bloc, as a key risk to the global economy.

But while the International Monetary Fund has trimmed its world growth estimates, surveys of hundreds of business executives in Europe indicate the economic damage is so far largely contained to Britain.

The so-called purchasing managers' index for Britain — a gauge of business activity closely watched by investors and policymakers — fell to 47.7 points in July from 52.4 in June. The figures are on a 100-point scale, with the 50 threshold separating growth from contraction.

The survey, conducted by IHS Markit, is one of the first official measures of how the economy responded to the vote, and is based on questionnaires sent to executives in over 1,200 companies between July 12 and 21.

"July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009," said Chris Williamson, chief economist at Markit. "The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to 'Brexit.'"

By contrast, the equivalent index for the 19-country eurozone dropped to 52.9 points from 53.1 in June. The drop was relatively small and suggests continued economic growth of around 1.5 percent annually.

A departure from the EU could mean companies based in Britain are cut off from the bloc's single market, which guarantees no tariffs on trade and the free movement of workers and money.

The uncertainty over Britain's trade relations, which will take years to renegotiate, is causing companies to hold back investment and hiring or even to make cuts. That could include European companies that are unsure about the future of their operations or sales in Britain.

The weeks of British political uncertainty, with the prime minister resigning after the vote and the main parties in disarray, also hurt confidence.

The Markit survey found that in Britain both business output and new orders fell in July for the first time since the end of 2012. Their drop from the previous month was the steepest in the survey's history.

The measure of service providers' optimism about the coming 12 months slumped to a seven-and-a-half year low. Manufacturers reported job cuts.

The report noted there wasn't an increase in business costs, which some are fearing as the plunge in the pound since the vote will make fuel, raw materials and imports more expensive. Those rises were offset in part by subdued wage inflation.

Michael Hewson, analyst at CMC Markets, said the survey findings were worse than expected.

"The big and important question now is whether this slowdown heralds a more permanent economic condition, or whether in the final days of July, we get a pickup in activity now that we have a more stable political environment and the Brexit fog has started to clear a little."

The findings will cement expectations that the Bank of England will provide more monetary stimulus to the economy at its next meeting in August, experts say. The pound sharply fell on the prospect, to $1.3090 from $1.3280 earlier in the day.

Britain's new Treasury chief, Philip Hammond, said he would be prepared to use the next budget update, called the Autumn Statement, to help the economy in the event of a downturn.

"We will have the opportunity with our Autumn Statements ... to reset fiscal policy if we deem it necessary to do so in light of the data that will emerge over the coming months," he said on a visit to Beijing ahead of a meeting of G-20 finance ministers in Chengdu.

IMF head Christine Lagarde called on European politicians to quickly end the uncertainty.

"Our first and immediate recommendation is for this uncertainty surrounding the terms of Brexit to be removed as quickly as possible so that we know the terms of trade and the ways in which the United Kingdom will continue to operate in the global economy," she said in Beijing.

Investors are watching the G-20 meeting for any sign the United States, Germany, China and other major economies may agree on coordinated action to accelerate a weak global economic recovery.

But U.S. Treasury Secretary Jacob Lew, speaking to reporters in Athens before flying to China, downplayed the likelihood of aggressive joint action.

"I don't think this is a moment that calls for the kind of coordinated action that occurred during the Great Recession in 2008 and 2009," said Lew. "It really is a moment where we each need to do what we can to ensure that where growth is soft it gets stronger and that prospects for the medium- and long-term are improved."

-- (c) Associated Press 2016-07-23

[SgtRock]

Brexit deals heavy hit to UK economy but eurozone holds up

Not for much longer.

Wait until September, then it will be all change for the euro.

The European Central Bank (ECB) will inject at least €1.1 trillion (£834bn) into the ailing eurozone economy.

http://www.bbc.com/news/business-30933515

[shirtless]

Britain will prevail, its only a matter of time.

[Steely Dan]

What they omit to mention is the mea culpa from the IMF who now still predict the UK economy to outgrow France and Germany over the next three years.

[SheungWan]

Britain will prevail, its only a matter of time.

The stopped clock theory of history.

[SheungWan]

What they omit to mention is the mea culpa from the IMF who now still predict the UK economy to outgrow France and Germany over the next three years.

What you omit to mention is that the IMF said that Brexit had thrown a spanner in the works for global recovery and that UK growth is predicted down by 0.9% for 2017 as a result of Brexit.

[alant]

so how is it the BOE released a statement saying the UK economy had not slowed since the vote as initially predicted.

Reports like this only aid the speculators, the figures referred to do not indicate contraction and there is no significant difference between the UK and EU figures.

No mention of record levels of employment in the UK compared to the EU.

All this from people that did not see the Brexit vote coming!

[sungod]

The same experts who also didnt see the last crash coming.

[petermik]

Britain will prevail, its only a matter of time.

The stopped clock theory of history.

And that theory will be proved to be correct

[soalbundy]

Britain will prevail, its only a matter of time.

If by that you mean the island will still be above water in 10 years time i agree

[SheungWan]

so how is it the BOE released a statement saying the UK economy had not slowed since the vote as initially predicted.

Reports like this only aid the speculators, the figures referred to do not indicate contraction and there is no significant difference between the UK and EU figures.

No mention of record levels of employment in the UK compared to the EU.

All this from people that did not see the Brexit vote coming!

It would be rather difficult for the BOE to say that the UK economy had not actually slowed about one month after the vote, so if you kindly could provide a link to the released statement that would be helpful. Evidence of potential contraction is a time lag. The latest PMI figures are forward looking indicators, but one month's figures need to be repeated to discern a definitive trend.

[SgtRock]

so how is it the BOE released a statement saying the UK economy had not slowed since the vote as initially predicted.

Reports like this only aid the speculators, the figures referred to do not indicate contraction and there is no significant difference between the UK and EU figures.

No mention of record levels of employment in the UK compared to the EU.

All this from people that did not see the Brexit vote coming!

It would be rather difficult for the BOE to say that the UK economy had not actually slowed about one month after the vote, so if you kindly could provide a link to the released statement that would be helpful. Evidence of potential contraction is a time lag. The latest PMI figures are forward looking indicators, but one month's figures need to be repeated to discern a definitive trend.

3 days ago

Bank of England report finds economy has not slowed since Brexit vote

https://www.theguardian.com/business/2016/jul/20/bank-of-england-agents-report-business-as-usual-after-brexit-eu-referendum

The current downward spiral of the £ is nothing more than money merchants making a killing while they can.

[Jip99]

What they omit to mention is the mea culpa from the IMF who now still predict the UK economy to outgrow France and Germany over the next three years.

What you omit to mention is that the IMF said that Brexit had thrown a spanner in the works for global recovery and that UK growth is predicted down by 0.9% for 2017 as a result of Brexit.

The IMF said quite a lot that has had to be retracted.

They also failed to convince the British public to remain and were branded as just being another element of Project Fear.

[Franky Bear]

And we will deal with it with out having to ask a Hungarian/Luxerburgh/French/ German/Spanish/Italian/Bulragian/Slovakian unelected politician for their approval.

[elgordo38]

Brexit deals heavy hit to UK economy but eurozone holds up

Not for much longer.

Wait until September, then it will be all change for the euro.

The European Central Bank (ECB) will inject at least 1.1 trillion (£834bn) into the ailing eurozone economy.[/size]

http://www.bbc.com/news/business-30933515

Tells rather a different story does it not. Just check out the health of the Euro banks especially Deutsche Bank. Its amazing how little a trillion Euro's buys now days.

[SgtRock]

Still some people need a good few pints of :

Lantau Island Shueng Wan. Great pint, great views.

Be like the Murphy's. It's not bitter.

Edited July 23, 2016 by SgtRock

[smudger1951]

We now see the repercussions of the falling pound. Instead of making us more competitive the rest of the world is buying the shop. Arm Holdings snapped up by the Japanese. IIf Carney lowers the bank rate I dread the future and for us expats.

[Franky Bear]

We now see the repercussions of the falling pound. Instead of making us more competitive the rest of the world is buying the shop. Arm Holdings snapped up by the Japanese. IIf Carney lowers the bank rate I dread the future and for us expats.

This isn't about the short term.

Plus, even though i've been an expat most of my adult life, we choose to live life as one. We have zero say in what those at home do in reality.

[bkkcanuck8]

so how is it the BOE released a statement saying the UK economy had not slowed since the vote as initially predicted.

Reports like this only aid the speculators, the figures referred to do not indicate contraction and there is no significant difference between the UK and EU figures.

No mention of record levels of employment in the UK compared to the EU.

All this from people that did not see the Brexit vote coming!

It would be rather difficult for the BOE to say that the UK economy had not actually slowed about one month after the vote, so if you kindly could provide a link to the released statement that would be helpful. Evidence of potential contraction is a time lag. The latest PMI figures are forward looking indicators, but one month's figures need to be repeated to discern a definitive trend.

3 days ago

Bank of England report finds economy has not slowed since Brexit vote

https://www.theguardian.com/business/2016/jul/20/bank-of-england-agents-report-business-as-usual-after-brexit-eu-referendum

The current downward spiral of the £ is nothing more than money merchants making a killing while they can.

Basically on a few weeks of hearsay evidence - we find no evidence that the economy is slowing.....

Problem is that very little gets decided that quickly.... and it is a matter of if we say it now before any data comes in to contradict it we can say anything we want.

[SgtRock]

Brexit deals heavy hit to UK economy but eurozone holds up

Not for much longer.

Wait until September, then it will be all change for the euro.

The European Central Bank (ECB) will inject at least 1.1 trillion (£834bn) into the ailing eurozone economy.[/size]

http://www.bbc.com/news/business-30933515

Tells rather a different story does it not. Just check out the health of the Euro banks especially Deutsche Bank. Its amazing how little a trillion Euro's buys now days.

Sure it does.

It is far more convenient to blame everything on Brexit.

Very little being reported on Italy handing out the begging bowl already.

[SgtRock]

It would be rather difficult for the BOE to say that the UK economy had not actually slowed about one month after the vote, so if you kindly could provide a link to the released statement that would be helpful. Evidence of potential contraction is a time lag. The latest PMI figures are forward looking indicators, but one month's figures need to be repeated to discern a definitive trend.

3 days ago

Bank of England report finds economy has not slowed since Brexit vote

https://www.theguardian.com/business/2016/jul/20/bank-of-england-agents-report-business-as-usual-after-brexit-eu-referendum

The current downward spiral of the £ is nothing more than money merchants making a killing while they can.

Basically on a few weeks of hearsay evidence - we find no evidence that the economy is slowing.....

Problem is that very little gets decided that quickly.... and it is a matter of if we say it now before any data comes in to contradict it we can say anything we want.

Sort out your reading comprehension problem.

The poster asked for a link to the BOE's statement, which is what I provided.

[Jonmarleesco]

Frankly, the U.K.'s post-Brexit economic stats depend on who is surveying whom, and who is quoting whom. But all doom and gloom it isn't.

[bkkcanuck8]

Sort out your reading comprehension problem.

The poster asked for a link to the BOE's statement, which is what I provided.

I did read the article:

The monthly survey by the Bank’s regional agents – considered to be the “eyes and ears” of policymakers in Threadneedle Street – found that a majority of firms questioned were not planning to mothball investment or change hiring plans.

The monthly survey... hmmm. I don't know about your government but monthly surveys are usually done and compiled for the end of the month. The referendum was 23 days into the month... so they only have 4 days... (5 days if you consider friday -- but I doubt they had any information on friday). They questioned them about hiring plans and investments (for the most part hearsay).

The Bank of England said its agents had stepped up their investigations in the wake of the Brexit vote to find out how businesses were reacting. It found that for many companies the result had come as a shock, but with few having contingency plans, the tendency had been to adopt a “business as usual” approach.

So basically they reported back that they did not have any current plans in place because the result was not what they were expecting. You don't know how it is going to affect your business - and you don't know what hires/layoffs you may need since usually that is well into a drop in actual business -- you cannot get rid of people that are actually needed right now based on orders you currently have.... and making staff changes is rather an expensive thing to do and has moral implications - so it is not something that gets decided in a day (especially since you are reacting to your customers and they were in shock and had no plans). So the only thing the business can say is "business as usual" since really you have nothing to go on at that point.

It is a classic case of releasing a press statement at best hearsay queries on very few days .... basically speaking on the record before you have anything to contradict you. It is akin to a captain of a ship saying... sailing is clear while sitting down in a cabin having a drink of port.... well it is always clear when you are not looking.

How did you read it?

Edited July 23, 2016 by bkkcanuck8

[SgtRock]

Sort out your reading comprehension problem.

The poster asked for a link to the BOE's statement, which is what I provided.

I did read the article:

The monthly survey by the Bank’s regional agents – considered to be the “eyes and ears” of policymakers in Threadneedle Street – found that a majority of firms questioned were not planning to mothball investment or change hiring plans.

The monthly survey... hmmm. I don't know about your government but monthly surveys are usually done and compiled for the end of the month. The referendum was 23 days into the month... so they only have 4 days... (5 days if you consider friday -- but I doubt they had any information on friday). They questioned them about hiring plans and investments (for the most part hearsay).

The Bank of England said its agents had stepped up their investigations in the wake of the Brexit vote to find out how businesses were reacting. It found that for many companies the result had come as a shock, but with few having contingency plans, the tendency had been to adopt a “business as usual” approach.

So basically they reported back that they did not have any current plans in place because the result was not what they were expecting. You don't know how it is going to affect your business - and you don't know what hires/layoffs you may need since usually that is well into a drop in actual business -- you cannot get rid of people that are actually needed right now based on orders you currently have.... and making staff changes is rather an expensive thing to do and has moral implications - so it is not something that gets decided in a day (especially since you are reacting to your customers and they were in shock and had no plans). So the only thing the business can say is "business as usual" since really you have nothing to go on at that point.

How did you read it?

I will tell you how I read it.

Fail to plan / Plan to fail.

If certain business's did not have contingency plans, Boo Farquin Hoo. Must try harder.

Again, your reading comprehension skills are letting you down. I did not ask you to read the article. I provided the article at the request of another poster, who it appeared, did not believe that the BOE had made that statement.

Now, for the benefit of us both, no need to reply to any of my posts until you have managed to overcome your reading comprehension problem.

Your assistance in this would be greatly appreciated.

[bkkcanuck8]

I will tell you how I read it.

Fail to plan / Plan to fail.

If certain business's did not have contingency plans, Boo Farquin Hoo. Must try harder.

Again, your reading comprehension skills are letting you down. I did not ask you to read the article. I provided the article at the request of another poster, who it appeared, did not believe that the BOE had made that statement.

Now, for the benefit of us both, no need to reply to any of my posts until you have managed to overcome your reading comprehension problem.

Your assistance in this would be greatly appreciated.

If you wanted a private conversation - there are mechanisms for that through private messaging. Sorry to tread on your private conversation in a public forum... actually not...

I failed to be clear and say "BOE did make a statement" because ... I really thought that since you had provided the link that it was bloody obvious that they had... and I had not said they did not.... so I omitted it.... I thought it would be very easy for anyone to understand... but apparently not... my bad...

And since we could all agree that the BOE did make a statement, I figured commenting on the contents - the meat of what they were making their statement on would be a reasonable followup.... And that was a case the BOE spokesman was speak before it had any data to the contrary -- or in fact any real data at all. When you do that all it is is spin. Waiting for the data would make it harder to spin if the data did not match your story.

As for businesses - yes, they should have planned.... but the reality is that at the top levels they rarely do plan for all contingencies unless they are contractually or regulatory obligated to do so. Of course being kind to the businesses.... how can you plan when you don't know what brexit is actually going to be? Will it be Norway, CETA trade agreement style or WTO...

Edited July 23, 2016 by bkkcanuck8

[Basil B]

What they omit to mention is the mea culpa from the IMF who now still predict the UK economy to outgrow France and Germany over the next three years.

As you quite rightly stated, the IMF has down graded their prediction for UK growth since Brexit but it is positive and still greater the France or Germany, and certainly not a recession.

From here the UK has really only one way to go and that is up, for the rest of Europe... just wait until Greece reneges again.

[Basil B]

Once again we Brits can see why we are better out of Europe with long delays at Dover due to French action.

The French have just introduced extra security just in time for the holiday period causing delays in excess of 12 hours, yet they help illegal migrants get in to the UK.

Europe would be a lot better without France.

[SheungWan]

so how is it the BOE released a statement saying the UK economy had not slowed since the vote as initially predicted.

Reports like this only aid the speculators, the figures referred to do not indicate contraction and there is no significant difference between the UK and EU figures.

No mention of record levels of employment in the UK compared to the EU.

All this from people that did not see the Brexit vote coming!

It would be rather difficult for the BOE to say that the UK economy had not actually slowed about one month after the vote, so if you kindly could provide a link to the released statement that would be helpful. Evidence of potential contraction is a time lag. The latest PMI figures are forward looking indicators, but one month's figures need to be repeated to discern a definitive trend.

3 days ago

Bank of England report finds economy has not slowed since Brexit vote

https://www.theguardian.com/business/2016/jul/20/bank-of-england-agents-report-business-as-usual-after-brexit-eu-referendum

The current downward spiral of the £ is nothing more than money merchants making a killing while they can.

The link is helpful, well partially helpful, as it links to the Guardian and the headline above 'BOE finds....' is an interpretation of the BOE findings. For the actual findings one has to follow the link on the article: http://www.bankofengland.co.uk/publications/Pages/agentssummary/2016/jul.aspx and what that does is spell out that companies are not implementing substantial changes to their current plans and holding to a steady as she goes, but that does not account for any new plans and strategies. However, because of the surrounding business uncertainty surrounding Brexit which has been seen to rise markedly, a third of the firms surveyed were anticipating a negative on forward plans. The most recent PMI figures will have evidenced that growing uncertainty and BOE will have monitored that.

[SheungWan]

Once again we Brits can see why we are better out of Europe with long delays at Dover due to French action.

The French have just introduced extra security just in time for the holiday period causing delays in excess of 12 hours, yet they help illegal migrants get in to the UK.

Europe would be a lot better without France.

If there is one thing the UK will be doing post-Brexit, is continuing to work with France on this issue. The we hate everybody from Calais onwards crowd do not live in the real world.

[sujoop]

The purchasing managers' index (PMI) is a standard bellwether. In this case Britain's PMI has dropped below the 50% threshold indicating a contraction from 52.4 previously to 47.7 this reporting period compiled between July 12 and 21. Eurozone 19 countries PMI dropped only slightly from 53.1 to 52.9 (the OP states 'June' but July figures are similar).

Thus, the latest PMI survey taken between July 12-21 indicates Britain's PMI was officially under-water. This is of course a snap-shot in time and the next 2 or so PMI surveys will start to form the trend line (likely to continue lagging or contracting further given many indications). All this is apparently 'much ado about nothing' to any Brexiter primarily motivated by immigration issues.

More:
'"A key feature of the PMI surveys is that they ask only for factual information. They are not surveys of opinions, intentions or expectations and the data therefore represent the closest one can get to “hard data” without asking for actual figures from companies.

Questions asked relate to key variables such as output, new orders, prices and employment. Questions take the form of up/down/same replies. For example, “Is your company’s output higher, the same or lower than one month ago?"

Edited July 23, 2016 by sujoop