Brexit: The great optimism killer?

EDITOR'S BLOG: Call me a remoaner if you will, but I'm not the only one who sees dark clouds ahead, says Matthew Gwyther.

by Matthew Gwyther
Last Updated: 14 Dec 2016

There is currently no greater sin within the heart of government or on the pages of The Daily Mail than talking our economy down. It is seen as treachery. The trouble is that the doubtful voices about our economic prospects in the coming years are now growing in volume.

There is also no doubt that our decision to go it alone outside the EU is the main reason why objective observers think we are in for more difficult times in the short to medium term. For the first six months since the referendum vote in June the numbers have looked pretty good across the board with the obvious exception of the pound’s exchange rate against both the dollar and the euro. Both growth and employment so far have held up well.

Anyone who expected an immediate economic downturn was proved wrong. But this is hardly surprising - we don’t actually leave the EU for some time. The time frame is TBA. It takes time for the die to be cast. However, in the FT’s most recent Boardroom Bellwether, , the governance body ICSA found that three-quarters of FTSE 350 company secretaries surveyed expected UK economic conditions to deteriorate during the next twelve months. Only 8% expected a ‘slight’ improvement, and none expected a marked revving up.

The consultancy Eden McCallum has just issued its annual Economic Outlook survey and its findings are even more discouraging. In recent years when asked about their levels of optimism for our economic outlook, participants gave answers that were largely positive. As recently as 2015, the proportion that felt somewhat or very optimistic was 72%. This year, however, the figure has dropped like a led balloon to 19%

It’s not hard to see why - Brexit. When asked about the economic impact of Brexit on the UK economy a full 75% said it would be bad or very bad. (Incidentally the impact of Brexit on the EU was thought to be even worse - 87% thought the effect would be bad or very bad.)

Eden McCallum, a sort of gig-group of ex- Bain and McKinseyites, has a pretty pucker client list. The sample size this year was 304, around the same as last year.

The consultancy now also has practices in Holland and Switzerland. By contrast with the Brits, the Dutch are extremely optimistic about their coming economic prospects - 80% are positive. A fifth of the Swiss surveyed, by the way, say that Brexit will be actively good for them…No doubt mopping up more financial services operatives from the UK who find themselves lacking a passport to practise.

There are some crumbs of comfort to be gleaned amid the gloom. We are not going to be alone in our difficulties. A full 70% of those surveyed think the arrival of The Donald in The White House means bad or very bad things for the global economy. (43% think he will be bad or very bad for the US economy, as well.) 

Listening to the minister for Brexit David Davies talking to his select committee this afternoon one was struck by his argument that Brexit will make us better and more congenial neighbours for the EU. ‘What’s the worst they could do to us?’ chirped Michael Gove who clearly believes that pragmatic bed-sharing arrangements among divorcees are commonplace. We shall see.  

Image credit: cjohnson7/Wikipedia

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