Realist, not conformist analysis of the latest financial, business and political news

Brexit’s To Blame For The British Economy – Odd, Innit?

The reports – cries of pain really- from the Treasury, G. Osborne and all about the immediate and deep recession we’d have if we even thought about leaving the European Union were published everywhere. Cheered from the rooftops even. Certainly, there was much smacking of the lips about how we really would get it in the neck if we had the temerity to differ with our betters.

As we know, it didn’t really turn out like that. But what’s interesting is that at present that very same Brexit is what is boosting the economy:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] That all seems reasonable, but there’s always a touch of hesitation in accepting such explanations for moves in the numbers. We don’t actually go out and ask people why they’re stockbuilding – just as one example. We can observe that they are but the why we’ve got to infer. Given that Brexit was supposed to have taken place and that it was a period of rising uncertainty then sure, Brexit related stockbuilding is a good call. But it is a call, not something we know absolutely. It’s feasible – although near vanishingly unlikely – that recent falls in the pound have led to a boom in export orders, the stockbuilding being preparation for those. No, I don’t believe it either, but it is, just about, possible as an explanation. [/perfectpullquote]

We have got a rise in stockbuilding, which is itself a rise in GDP. Our best bet is that it is Brexit which has caused this.

So, Brexit is causing economic growth. And that’s actually real, rather than a prediction that didn’t come off – or, as we should more accurately name those earlier stories, lies.

Funny how those two sides of the very same story are being equally reported, isn’t it?

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5 years ago

“We have got a rise in stockbuilding, which is itself a rise in GDP. Our best bet is that it is Brexit which has caused this.”
Stock building costs money right now, and there may be a better use for that money. And it will eventually be unwound to realistic stock levels, and that’s going to show as a drop in GDP.

5 years ago
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Or sales trends are upward, so inventory is being increased in anticipation of increased demand so orders can be shipped on a timely basis.

Bigger inventory does not in this case mean stock turnover will be slower.

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