If you’re looking for any sort of respite from a news agenda firmly focused on the Brexit negotiations, then I would suggest you turn off all media for at least the next 24 months because it’s quite clear that during 2018 and 2019 it’s going to dominate proceedings, perhaps alongside the political travails of one Donald Trump.
Even when we appear to be in something of a ‘down week’ regarding Brexit, you can guarantee there’ll be at least one major news story related to it. Take earlier this month when Nigel Farage reignited the ‘second referendum debate’ by suggesting he’d almost come to a position where a second vote on remaining/leaving would be acceptable to him. The reason being that it might end the ongoing to-ing and fro-ing ‘for a generation’. I wish Nigel well with that thought but a) I’m quite positive there won’t be another referendum and b) even if it was held, does he truly believe that would be an end to it? I doubt it very much.
While this media frenzy goes on, every single one of us is trying to get a handle on what Brexit truly means for us, will it be as bad an outcome for the economy as some suggest, and how will this all come out in the wash, particularly if there is ‘No Deal’ between the UK and the EU on trade.
Judging the mood music on this one is incredibly difficult – what is however tangible is the performance of the UK economy since the EU vote was taken over 18 months ago. Doesn’t time fly while you’re having fun? Before the vote the weight of the Government – and specifically HM Treasury – machine was charged with showing the overwhelming negative impact that a vote to leave would deliver. And that was predicted to come almost as soon as the UK voted Leave.
You’ll no doubt remember the suggestions that the UK would immediately dip into a recession of its own making, with house prices slumping, unemployment rising dramatically, businesses leaving these shores in their droves, GDP suffering badly and essentially the entire UK economy sinking slowly beneath the waves. The then-Chancellor, George Osborne, said he would be forced to hold an emergency Budget at which he would have to increase taxation and broaden the range of austerity measures that had already been introduced. The Bank of England too thrust itself into the debate with all manner of warnings about the potential impact a Brexit vote would have.
18 months on, what does the economy look like? Well, it’s fair to say that it looks nothing like the suggestions above. I recently read an article by Professor Patrick Minford from Cardiff University entitled, ‘Brexit is already shaping the economy for the better’ which might not chime with the overall media narrative but gives an interesting counter-analysis of various economic measures, how they look compared to their pre-vote predictions, and how they appear to be rather more positive than what he calls the media ‘consensus’ on Brexit which tends to err on the side of the argument marked, ‘the economy is going to hell in a hand basket’.
Whatever your views on Brexit, and it’s potential repercussions for all of us, I would urge you to read this very interesting article if only as a counter-point to some of the commentary you might have seen more readily in the last year and a half. It is, without doubt, a more positive appraisal – and let’s just point out that Professor Minford believes a ‘No Deal’ would be a far better outcome for the UK than say a ‘Canada-plus’ type outcome – and it does provide a view that is not necessarily shared a lot in the media, one which shows the underlying foundations of the UK economy as being a lot stronger than we might have envisaged back in mid-2016.
Minford believes that the vote has actually had very little impact on the economy. He writes: ‘…growth has remained pretty much unaltered….Moreover it is reacting rather healthily to the Brexit devaluation with a consumption slowdown, some investment growth and an improvement in net exports’. He adds: ‘…were it not for the feverish ‘despite Brexit’ atmosphere that has gripped the forecasting community such a short term trend would have been widely welcomed’. He does suggest that business people and the general public tend to say they’re not particularly confident about the outcome of the negotiations but seems to put this down to media’s take which he says is ‘relentlessly downbeat’.
In all of this, I couldn’t help but find the similarities in this debate to how the buy-to-let market is sometimes perceived – so many have called the end of the market over the last couple of decades that I imagine they are constantly surprised it not only continues to exist but perform strongly. As Minford points out, there are always going to be challenges to overcome whether in our own field or in terms of Brexit, but we should perhaps not be too hasty to think the worst because, certainly when it comes to a business response, most ‘players’ are able to deliver not just a measured one but one that keeps on pushing all parties in the right direction.
Bob Young is chief executive officer of Fleet Mortgages