Economists are admitting that they were wrong about the short-term negative impact of the Brexit vote on the British economy, the Wall Street Journal reported today.
“The negative impact of the UK’s vote to leave the EU on growth in the UK and euro area appears to have been materially less than we expected in late June,” Credit Suisse research analysts said.
The Wall Street Journal reported that Credit Suisse now forecasts UK growth of 1.9 per cent in 2016, up from a previous estimate of 1%. It predicts the economy will grow by 0.5 per cent in 2017 after previously forecasting a 1 per cent contraction.
The bank said the speedy appointment of a new prime minister, a weaker currency and the Bank of England’s policy intervention have all stabilised the economy, suggesting that a sharp recession, as previously forecast, is now unlikely to materialise.
Economists at JP Morgan this week raised their forecasts this week after reports showed a sharp bounce back in services and manufacturing, the Wall Street Journal reported.
“In the Euro area and the UK, incoming surveys and data suggest the hit from Brexit has been smaller than anticipated,” JP Morgan said.
The bank boosted its 2016 forecast to 1.9 per cent from 1.7 per cent and its 2017 estimate to 0.9 per cent from 0.6%.
The Wall Street Journal reported that conomists at Barclays acknowledged the data poses ‘upside risks’ to their current forecasts but said they plan to wait for more evidence of a recovery before revising their outlook.
“As comments from global leaders during the G20 summit this weekend showed, Brexit uncertainty is far from over. The rebound in sentiment puts it at levels broadly seen in June, where sentiment had been on a downward trend pre-referendum in any case,” Barclays said.