Fears of an immediate, sharp recession in the UK in response to the vote to leave the European Union have proved inaccurate.
Despite dramatic predictions of a sudden downturn in the British economy following the June 23 referendum, economic conditions have – on the contrary – improved across many different measures.
“If the UK votes to leave the EU, it is likely to entail an immediate and simultaneous economic and financial shock for the UK,’ stated major international bank Credit Suisse, ahead of the vote.
By September, the bank had changed its outlook considerably: “The impact of the UK’s vote to leave the EU on the UK economy seems to be materially less negative than we expected,” it confirmed.
The same about-face came from US giants J P Morgan and Goldman Sachs, both of whom released dire warnings of job losses and recession. “We now expect the UK economy to avoid even the technical recession that we had foreseen immediately after the referendum,” admitted Goldman Sachs.
Many banks had donated substantial funds to the Remain campaign, arguing that the role of London as a global financial centre would be severely damaged by a Leave vote. This outcome now seems far less likely, despite banks such as UBS discussing job relocations and continued alerts that, once Article 50 is triggered, to begin the formal exit process, there may be further risks to the economy.
The troubled state of other European nations such as Italy, Greece, France and even Germany (which has experienced political turbulence in recent weeks) may have given the bankers a different perspective on the relatively stable and growing British economy.