What Do We Know?
- Activity surveys in the UK manufacturing and services sectors have rebounded from an unprecedented record drop in July with a monthly gain that was the largest ever observed in the 20-year Markit PMI survey history.
- Comparable surveys in the EU show a negligible Brexit impact. Both the industry and services sectors recorded a drop in confidence related to weakened new orders. Confidence in the retail sector fell appreciably with negative views on the present and expected business activity.
- The fall in the value of the pound is working through the UK economy with higher input and output prices. This is expected to lead to a modest rise of inflation in due course.
- Stock markets in Europe, and particularly in the UK, have been buoyant, rising 10 per cent from their pre-referendum levels.
- Gus O’Donnell, the former head of the British Civil Service, tells Radio 4 listeners that over a sixth of the UK statue book and 12,295 regulations are related to EU laws.
- The Japanese Government has prepared a highly unusual strongly worded warning of the economic consequences of failing to reach an agreement for free market access for Japanese companies who have invested in the region.
Thoughts from a Think Tank
Preparing for the UK’s Brexit Negotiation. Chatham House
Finding the exit: the future of UK-EU relations. Global Government Forum
Brexit: impact across policy areas. House of Commons Library
Brexit: the challenge ahead. Institute for Fiscal Studies
Which Brexit will we choose? British Future
Message to the United Kingdom and the European Union. Government of Japan
Dates to Look Out For
16 September 2016: Informal meeting in Bratislava of the 27 EU leaders (without the UK)
20-21 October 2016: Council of Europe meeting of EU leaders
27 October 2016: Preliminary Estimate of UK GDP, July to September
25 November 2016 Second Estimate of UK GDP, July to September
23 April – 7 May 2017: French Presidential Election (1st and 2nd rounds)
27 August – 22 October 2017: German Federal Election
In chief-exec.com’s opinion
Good advice in a tsunami zone is when the sea becomes ominously peaceful and retreats towards the horizon – head for the hills. Big falls one month and bigger rises the next do not signal success or failure, just turbulence. Buoyant stock markets may relay bullish anticipations of real economic growth or the need for investment capital to desert safe havens to find growth in more risky assets. Since the dawn of time such signs have fuelled beliefs, which are the only thing currently guiding the people, but they offer little evidence of where we are actually heading
No news is good news is another piece of advice that is particularly pertinent to Prime Minister Theresa May. The Brexit referendum outcome emerged from a coalition of two very different groups: an anti-establishment collective of those left behind by the Rolls Royce of global capitalism and a distinctly establishment cohort that wants to be in its driving seat. Holding this coalition together, let alone bringing along the other half of the UK population, will be Herculean task in the presence of any news.
To understand the problem is to see Brexit as part of a rising international tide of anti-establishment sentiment. Donald Trump, Nigel Farage, Marine Le Pen, (to name a few) share the tried-and-test recipe of anti-immigration rhetoric to identify scapegoats responsible for the absence of employment and lowering of wages. It is said that Brexit is a victory for the small man who has had enough, and other small men and women can emulate this triumph.
The position of Theresa May which emerged at the recent G20 meeting in Hangzhou, China can be summarised by wanting the UK to be “the global leader in free trade”. Other leaders talked about the need to “civilise capitalism”, to “address the issue of fairness” and that “growth has been too low for too long for too few”. However, politicians cannot deliver on this agenda – but business leaders can.
Despite the uncertainty business needs to keep going. In the workshops and offices there is not the option to wait around until the fog clears. Orders need to be fulfilled, salaries and taxes need to be paid and innovations need to be born to enhance quality of life for consumers.
To a certain extent in Brexit, the EU is an unloved victim of the emergence of this new global recognition of the needs of the common man. In recognising the problem, politics should enable and embolden business to deliver the solution.