Global ratings agency S&P Global has a cautious message for Brexiteers who are gleefully dismissing the remain camp’s — dubbed “Project Fear” — economic warnings.
“While the [economic] news is encouraging” in the weeks since Brexit “we believe it has no bearing on the cloudy longer-term outlook for the U.K. economy,” said economist Sophie Tahiri and her team at S&P.
Ahead of the referendum on Britain’s membership of the EU on June 23, almost all of the economists and analysts warned the UK to expect a recession if it plumped for Brexit.
However, economic data in August pointed to a rebound for the economy, the labour market, and property. Morgan Stanley and Credit Suisse have also rowed back on earlier recession predictions, saying they now think the UK will narrowly avoid a recession.
Brexit supporters have seized on this to claim that the pre-Brexit economic forecasts were simply scare tactics used by “Project Fear,” the name given to the Remain camp by Vote Leave.
But S&P says:
“Any celebration about the rebound in August and conclusion that life has returned to “business as usual” may prove to be premature or even a mirage. The uncertainty surrounding the U.K’s future outside of the E.U. and the associated economic risks, which we think are pronounced and predominantly skewed to the downside, is likely to gradually take its toll, particularly on investment, as businesses start dealing with the new Brexit reality.”
Tahiri and team say August’s data “has no bearing on the cloudy longer-term outlook for the U.K. economy.”
S&P Global’s warning comes on the same day as the British Chamber of Commerce (BCC) cut growth forecasts for the UK drastically. BCC’s head of economics, Suren Thiru, said in a statement: “Mounting uncertainty is likely to put a brake on investment, while rising inflation and moderately weaker labour market conditions are expected to stifle consumer spending.”
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