A rushed and early PMI survey

There’s no let up in the efforts to talk the UK economy down. PMI rushed out a week early their July survey, with less than a full set of responses, to show that the confidence of a number of senior business executives fell when they got the result of the Brexit vote wrong. There’s a surprise!

These surveys have forecast recessions in the past that did not happen. Confidence took a nasty knock on 9/11 for understandable reasons but it did not lead to a recession. It would be surprising if many executives who by a large majority seemed to vote Remain suddenly expressed confidence a few days after losing the vote. As I discovered in the referendum campaign a large proportion of senior large company executives were keen to remain.

I suggest commentators and pundits calm down and await data on what actually happens June- October in the real economy. The signs I see suggest there will be no recession. Employment is at high levels, real wages are rising, and export intentions are up.

The Chancellor has said that he will await more data  and come to a judgement about the balance of the budget and economic policy at the time of the Autumn Statement in the normal way. I welcome that commonsense approach. If government borrowing rates remain at the new much lower levels we have reached in recent weeks post Brexit, he will have an immediate windfall in the form of lower future interest charges on government debt. He could use this to cut the deficit or to spend a bit more.  There is also the question of when will the government cease making financial contributions to the EU.  That money should be spent on our priorities, as argued here before.

There is no need to move to a government  surplus by 2020-21, unless the economy has by then  heated up too much and is in danger of going too fast. At current borrowing rates using some borrowed money for investment could make sense. It will be important to make sure the chosen investments do add to national wealth and income by being well thought through.

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78 Comments

  1. Nig l
    Posted July 23, 2016 at 6:05 am | Permalink

    The Chancellor should get Lloyds away after their forthcoming update. Give the markets and the Treasury a real boost and get rid of the overhang that is claimed to be holding their share price back. As far as the PMI is concerned, they are close to useless until the effect of the pounds devaluation is felt in terms of increased foreign earnings and the hoped for increase in exports works through the economy. However once again as we have done continuously post war we have devalued our way to competitiveness. I take your point on investment but it should be to increase our ability to earn our way globally not once again boost internal consumption.

  2. alan jutson
    Posted July 23, 2016 at 6:05 am | Permalink

    The doom mongers are still out there in large numbers, still trying to argue for a battle that was lost.
    If they do not change their view and actions to a more positive and realistic stance they will eventually bring about their own downfall for their own Companies, then they will say they were right !

    I see yet more Countries (Brazil amongst others) are now wishing to do trade deals with us.

    I do hope Liam Fox and his team are taking note, and I do hope our new Prime Minister will expand his staff and remit to give him enough people to complete all of these talks ASAP.

    • Owen Francis
      Posted July 24, 2016 at 2:27 am | Permalink

      I am saddened how much effort there is to talk down the country and economy post Brexit … Politicians and the media and business leaders.

      It seems these “remain” doomsayers would rather the country do badly and they be proved right rather than a good Brexit path be followed and the country do well. Human nature I suppose.

    • John Freeman
      Posted July 25, 2016 at 1:04 pm | Permalink

      We hope and pray they do as we export less to Brazil India and China combined than we do to Eire. We really do face a massive problem. Please tell us what we manufacture at highly compeetive rates we can ship to these 3 countries

      Reply Ireland is rightly very keen to keep our trade, and there is every reason for us b0th to do so!

  3. formula57
    Posted July 23, 2016 at 6:10 am | Permalink

    Indeed let us await the real economic outturn and disregard a conjured-up partial survey result.

    I do, however, foresee a real danger that in the face of so many Remain side warnings being shown to be false, Brexit may not succeed in displacing Mrs Thatcher as the default attribution for the cause of all ills by some of the weak minded.

    • Lifelogic
      Posted July 23, 2016 at 8:03 am | Permalink

      Well is it surely the BBC & the “Guardian think” people who endlessly encourages the idea that Thatcher (and of course the Daily Mail) are the sources of all ills of the World.

      The problem with Lady Thatcher is that she did not cut the state sector down anything like enough, did not sort out the absurd structure of the NHS, did not sort out the life on benefit culture, did not cut taxes and red tape sufficiently, allowed John Major to force her in to the ERM, went down the greencrap agenda and she gave away far too many powers to the EU.

      She was not “Thatcherite” enough & by rather a long way. Hopefully Mrs May can reinvent herself as a real Tory and do the things that actually work for a change. Namely set the people free from the straight jacket of the state.

    • MickN
      Posted July 23, 2016 at 8:35 am | Permalink

      I was saying only yesterday that Lady Thatcher will indeed be able to rest in peace now as there is something else for the hard of thinking to blame all the real and imagined ills of society on. It can only be a matter of time before someone blames yesterdays tragedy in Munich on Brexit as Chris Bryant MP blamed it for the failed coup in Turkey.
      I saw a comment on another site a couple of days ago. It was from a gentleman who said that recently he had been castigated by the young ones of being old and uneducated and selling out their futures in the vote to leave the EU. He pointed out that whilst he is still running a business and creating jobs they are now running around chasing virtual cartoons.

      • Lifelogic
        Posted July 23, 2016 at 7:34 pm | Permalink

        Well the remainers did try to blame the death of Jo Cox on the “atmosphere of hatred” from leave campaign. They also seemed to blame poor Andrea Leadsom for the fact they Mrs May could not have children. Little is beyond the pale for these people. Doubtless Osborne will blame the mess he left on Brexit. He should be grateful for the excuse that he now has for his incompetence, pension and landlord mugging and IHT ratting agenda (of much waste and endless tax increases and tax complexity). I would put almost nothing past them.

        Clegg was wittering about T May saying she wanted the closest possible relationship with the EU, which he naturaly took to mean something like dreadful open borders deal Norway has. No thanks Clegg. The public told your party where to go and rightly so. Rather a shame you (only just) managed to escape the cull.

        • Hope
          Posted July 24, 2016 at 12:37 pm | Permalink

          They are giving his wife air time about Brexit issues as if she is an independent expert!

          • Lifelogic
            Posted July 24, 2016 at 7:44 pm | Permalink

            The BBC is that I assume? Well “human rights lawyers” certainly know where their bread is buttered I suppose.

            The UK need far fewer layers, bureaucrats, red tape merchants and accountants and rather more people who actually produce products of value to the public.

      • Roy Grainger
        Posted July 24, 2016 at 3:58 am | Permalink

        Indeed. Some of the young seem inordinately upset about leaving a customs union. One wonders what they’d be like if something serious happened.

  4. James Jameson
    Posted July 23, 2016 at 6:14 am | Permalink

    Which priorities will the saved EU contribution actually be spent on? It has been promised to different interest groups several times over by different factions of Brexit, and indeed by several individual Brexiteers.

    • rose
      Posted July 23, 2016 at 7:38 pm | Permalink

      I don’t remember any Brexit speakers promising anything. They weren’t in a position to. It was the hostile media and remainiacs who kept speaking of “promises”. And they still are.

      • Lifelogic
        Posted July 24, 2016 at 7:46 pm | Permalink

        Exactly Brexit supporters were not a government in exile waiting for the referendum result to be reinstated. They could promise nothing, the reamainers are still in charge.

      • John Freeman
        Posted July 25, 2016 at 1:15 pm | Permalink

        Wake up or are you Sleeping Beauty. They promised £350 million per week on NHS. They said immigration would stop. They promised we would be better off financially but they lied day in day out. The new Old Age Pensioner incharge of Brxit promises “trade 10 times that of the EU” Hello that is 1.5 times as much as total world trade. What idiots we have leading us towards a disasterous time unless compromises are made

        Reply Vote Leave made no such promises. I remember being repeatedly asked by interviewers what target we would set for reduced migration, telling them that would be for the government and parliament to decide once we had taken back control of our borders.

    • NickC
      Posted July 23, 2016 at 8:16 pm | Permalink

      James, Could you cite the actual several “promises” made by the Brexiteer factions and individuals to different interest groups? I would be looking for at least 3 (to qualify for the description “several”) different factions, and at least 3 individuals, making promises to at least 3 different interest groups, with references. The minimum of 27 citations would naturally have to be from original text, not the parodies espoused by David Cameron, George Osborne, Bob Geldof, BSE, FT, Guardian, BBC, Sunday Mail, IMF, POTUS, CBI, or anyone else from the establishment. Please be aware that illustrations are not promises.

      • John Freeman
        Posted July 25, 2016 at 1:22 pm | Permalink

        Why utter rubbish. We were promised 350 million per week for NHS.(Johnson) We were promised immigration would stop(Farage) we were assured we could spend the savings of contributions by cutting tax on fuel oil (Gove). Even the OAP in charge of Brexit negotiations is still promised individual trade deals with France Germany etc(NOT POSSIBLE) and now he tells us that we will do 10 times as much trade with others than we did with the EU. Trouble is that is 150 per more than the total annual world trade.. Why have you omitted the Daily Express that (printed their claims ed)

        Reply Your recollections are not the same as mine. You do not refer to all the counter claims and strange forecasts put out by Remain. I note you do not quote any of my pieces, where I set it all out fairly and accurately.

    • Barry Laughton
      Posted July 24, 2016 at 3:47 pm | Permalink

      Sounds like you believe the EU is better at distributing UK taxpayers money than than the UK government

  5. Margaret
    Posted July 23, 2016 at 6:30 am | Permalink

    Again the first comment of the morning, you yourself writing this piece prior to the Munich shootings, must be to send thoughts of sadness to those who have been injured and lost their lives. The families will count all acts of terrorism as just that, whether it was a lone Iranian or connected to IS. Some comment that there are some lone mentally unstable killers and should not be connected to groups. All those who practice indiscriminate killing like these on the streets are mentally unstable.

    So , executives have been given the cold shoulder, by who and what organisations determined to fragment the west by mixing oil and water , which they realise is impossible.

    I think the sentiments of brotherhood have now, although they shouldn’t be belittled, have been overridden by the money gods .We in the UK stand powerful due to our temperate climate, our sea boundaries and defence and desirability as a centre where others can make money without the threat of the shiny stuff being given to the state. The factions who work on the nerves of people will not win . If people have the money they will spend and save, If they don’t they won’t unless they cannot control their spending and become bankrupts. Full stop.

  6. Lifelogic
    Posted July 23, 2016 at 6:38 am | Permalink

    You say:-At current borrowing rates using some borrowed money for investment could make sense. It will be important to make sure the chosen investments do add to national wealth and income by being well thought through.

    Indeed but governments seem to call everything an investment even the absurd HS2 and Hinckley.

    Use the funds to give some tax cuts so people can invest their own money they do it far more efficiently, give the go ahead for runways, fracking, efficient new power generation, stop the greencrap subsidies, relax planning controls ….

    One of the daftest planning approaches often forces people to demolish one perfectly good house to be allowed to build another newer one. When for less cost overall they could have two houses by just building the new one as well. as keeping the old. This when we have a large shortage of homes. Government insanity is everywhere.

    What wasteful insanity this is when more houses are needed.

  7. JoeSoap
    Posted July 23, 2016 at 6:43 am | Permalink

    Anecdotal but we and other engineers have seen business pick up fairly dramatically in July after a weak previous 9 months.
    Business is all about finding opportunities and capitalising on them and not taking too much notice of tick box surveys.

  8. Denis Cooper
    Posted July 23, 2016 at 6:48 am | Permalink

    There’s a chart of PMI back to 2013 here:

    http://www.telegraph.co.uk/opinion/2016/07/22/project-fears-worst-nightmares-have-not-come-true-still-brexit-w/

    It’s been a downwards trend since October 2013 when the composite peaked at 62, by January 2016 it was already down to 56 and what has happened since then has been a steepening of the pre-existing trend.

    Obviously one cannot discount uncertainty over the referendum as a negative influence on top of the others which already existed. It would have helped if the government had not decided to inject its own massive dose of negativity and had instead made some sensible contingency plans in case the vote went against them, a failure which the Foreign Affairs Committee has condemned as “gross negligence”.

  9. Ian Wragg
    Posted July 23, 2016 at 7:02 am | Permalink

    Slightly off topic I was watching BBC news re Munich shooting.
    The BBC was trying its level best to disassociate Islamic connections with the shooting.
    When the German correspondent indicated that large numbers of Germans felt intimidated by large numbers of Muslim immigrants the conversation was quickly changed.
    It obviously doesn’t fit the narrative same as the Brexit vote.
    I’m sure the great and good would happily bankrupt Britain just to keep us under Brussels rule.
    Will the Chancellor remove VAT on fuel and Tampons now we are heading for the door or are we going to continue handing over 20 billion pounds annually until God knows when.
    No one will believe the government whilst we hand over this tribute to Brussels and ring fence foreign aid.

    • Hope
      Posted July 24, 2016 at 12:40 pm | Permalink

      You only have to think of the cover up over the Cologne sexual assaults by immigrants on indigenous white women to realise how corrupt Merkel’s govt. is towards mass immigration.

  10. Know-Dice
    Posted July 23, 2016 at 7:10 am | Permalink

    A straw poll of the companies we deal with in Wokingham and Reading, shows them busier than ever 🙂

    It’s a shame all these pollsters just don’t seem to ask the right people whether it’s political polls or economic, they just get it wrong every time…

    Certainly on the release of PMI figures the Pound vs. Euro dropped from around 1.20327 to 1.18838 then recovering to 1.9448 the conclusion is that the “Markets” like instability as this is how they make their money.

    • Know-Dice
      Posted July 23, 2016 at 7:14 am | Permalink

      Small builders around here also seem to be doing well, at least 4 houses in our road are having major building work done, there seems to be a lot of interest in home improvements rather than the excessive cost of moving – thanks to ex-chancellor Osborne 👿

      • Lifelogic
        Posted July 23, 2016 at 7:37 pm | Permalink

        Indeed and very damaging indeed the excessive stamp duty tax is, preventing & deterring people from moving as it does and putting rents up hugely.

  11. Chris S
    Posted July 23, 2016 at 7:24 am | Permalink

    The BBC are up to their usual tricks.

    Last week an Estate Agent I know received a call from a researcher on the Jeremy Vine show ( Radio 2 ) wanting to set up a telephone interview with Vine for that day’s show.
    The researcher was clearly trying to steer the agent towards saying that the market had deteriorated badly since Brexit. In fact, in his area, the market has done more than held steady : he had had his best month of the year and sales were up on July last year.

    Needless to say, the researcher beat a hasty retreat and the interview never took place.

    Another obvious example of the BBC trying to make the news rather than reporting it.

    • Lifelogic
      Posted July 23, 2016 at 7:39 pm | Permalink

      Indeed, when any topic is discussed by the BBC you nearly always know the line they will take in advance.

  12. Richard1
    Posted July 23, 2016 at 7:34 am | Permalink

    Your last point is a key one. It makes sense to take advantage of these low borrowing rates to invest in infrastructure if – and only if – projects can be found which have a positive value. There is an erroneous view held by many, even well informed commentators such as the FT’s Martin Wolf, that any infrastructure spending makes sense because of the low rates. This is not so. Borrowing must be repaid and government spending money diverts resources (and raises the cost for) other potential projects. It is quite possible for the government to spend money on projects which will make us poorer. HS2 seems to be an example.

    Sensible priorities would seem to include a new runway at either Heathrow or Gatwick, much improved roads running East-West and urgent roll out of fast broadband, an area where the UK is now falling woefully behind in rural areas due to the monopoly held by BT/Openreach.

  13. Roy Grainger
    Posted July 23, 2016 at 7:39 am | Permalink

    As nothing at all has changed in our trading arrangements with anyone at this point all these gloomy forecasts are just based on sentiment. They have the capacity to become self-fulfilling particularly given the prominence they get on BBC and even worse (surprisingly) on Sky.

    I have some sympathy with the U.K. academics who are now being frozen out of positions in EU funded research consortia. It would be wise to selectively stop parts of our EU payments immediately in those areas where people are already behaving as if we have left.

    • Know-Dice
      Posted July 24, 2016 at 6:45 am | Permalink

      Yes, withhold EU contributions where it can be shown that UK academics are being “frozen out” of these research opportunities.

      FYI Viscount Ridley made these comments in a Lords debate earlier this year (Hansard Column 904):

      “In the case of scientific co-operation, not only is our closest scientific co-operator—measured by the number of co-authors on scientific papers—the United States, not the EU, but many of the formal scientific collaborations across the continent of Europe, such as the European Molecular Biology Organization, the fusion project ITER, the European Space Agency, and the particle physics laboratory CERN are not EU projects, they are European projects. Indeed, CERN has an accelerator which runs under an EU external border. Furthermore, even the EU’s science funding projects, FP7 and Horizon 2020, have 13 non-EU members in them including Norway, Switzerland, Turkey, ​Israel and other countries. I ask my noble friend the Minister: can we please not make the mistake of using “Europe” when we mean the EU, and not imply that they are the same thing when they are not? One is a political and bureaucratic supranational body with a democratic deficit and the other is a principle of international collaboration.”

      https://hansard.digiminster.com/Lords/2016-03-02/debates/16030273000445/EuropeanUnionReferendum%28DateOfReferendumEtc%29Regulations2016#contribution-16030296000116

      • Lifelogic
        Posted July 24, 2016 at 7:51 pm | Permalink

        Indeed thank goodness with have Viscount Matt Ridley who almost always talks sense, so unlike about 80% of the House of Commons and 60% of the House of Lords.

  14. Antisthenes
    Posted July 23, 2016 at 7:41 am | Permalink

    The BBC to highlight business uncertainty over Brexit sent a reporter out to interview a business that manufactures passenger aircraft seats. The Boss of that company did indeed say that orders recently had dropped considerably. Then he went on to say that 90% of orders were for export and the drop in the pound had made them 9% cheaper. The implication being for that business at least the future looked rosy.

    What this tells me is that there has been a knee jerk reaction to the referendum result exacerbated by the sour grapes of some of the remain in lot. If common sense prevails but then that is in short supply everything should settle down until publication of the Brexit wish list and the EU response. It will of course come out in dribs and drabs and the roller coaster ride will begin as everyone and their uncle will use it to further their interests.

  15. fedupsoutherner
    Posted July 23, 2016 at 7:45 am | Permalink

    ‘ It will be important to make sure the chosen investments do add to national wealth and income by being well thought through.’

    I hope this means fracking!! It takes 10 years to get this through the planning system here and even then the councils vote it out so it never happens. In the USA it is a week. Not much difference there then. Fracking would boost our economy and create many needed jobs. Let’s get going!! Why do we put obstacles in the way? Wind farm developments have already caused havoc with water supplies in some areas of Scotland and wildlife has been ignored to its peril. It takes an injuction from the courts to stop the SNP erecting more of the things. We need security of supply and wind doesn’t do the job. Fracked oil and gas would and be cleaner than running our power stations part time to take account of wind when it is there and when it’s not. Let’s be sensible and get behind this. No subsidies from the public would be needed contrary to the vast sums we pay out for wind turbines. Every economy benefits from cheaper energy. You can’t make thing when you have a power cut.

  16. Anonymous
    Posted July 23, 2016 at 7:57 am | Permalink

    There are huge forces at work to stop Brexit.

    Whatever.

    There must NOT be a second referendum. Let the PM state that we are staying without the mandate of the people.

    If we can concentrate on stopping a second referendum, which they (the EU) will engineer as they have so many times before until they get the result they want.

    The best we can hope for is to be In the EU and Against it. And that way we’ll get the best deals.

    • Newmania
      Posted July 23, 2016 at 8:51 pm | Permalink

      Why not , the result was narrow and no manadate for a complete change in our relationship with the EU as if the 48% didn`t exist .It seems to me that if a few concessions are gained then another referendum make sense.
      a

      Reply The Remain side led by the PM made crystal clear there would be no second referendum and their defeat meant exit, as did Vote Leave. Brexit means Brexit. If a government is narrowly elected we don’t have another election. That government gets on with its Manifesto promises.

      • Anonymous
        Posted July 24, 2016 at 7:28 am | Permalink

        “The result was narrow and no mandate for…”

        This ignores that most of the 48% disliked the EU too. We had gone through months of Project Fear. I know of very few who voted Remain because they like the EU.

        “…if a few concessions are gained then another referendum makes sense.”

        Which I think will happen and is what I’m trying to warn against.

        A second referendum must be resisted at all costs.

        If you want to ignore democratic will and due process, Newmania, then you can bloody well do so openly and without mandate.

        At least be honest about what you are.

        (You’ve already demonstrated here that you have a superior and haughty attitude to those who think differently to you.)

  17. Brian Tomkinson
    Posted July 23, 2016 at 8:05 am | Permalink

    As we have come to expect, the broadcast media seized gleefully on the PMI survey and its negative connotations. Not a day goes by without the constant drum of anti-Brexit propaganda on all the news channels. All economic gloomy news is blamed on Brexit and any positive news is ignored or it is claimed that this is because Brexit has not yet happened. There are powerful forces at work to thwart the democratically expressed will of the British people and they are busy trying to overturn the instruction given to the government to take the UK out of the EU.

  18. Tim L
    Posted July 23, 2016 at 8:45 am | Permalink

    John

    I suppose you could say that the remainers have now become the skeptics.

    A label they rightly deserve in my view.

  19. CHRISTOPHER HOUSTON
    Posted July 23, 2016 at 9:04 am | Permalink

    Off Topic:
    Without going into detail as I have done this elsewhere: Munich:

    No German journalist should ever be considered for any award for their professional qualities.
    All cameras in Germany should be removed from their fixed locations as they are obviously not functioning at all.
    The BBC and Sky News journalists on air last night should be suspended from their employments. The broadcasting licence for Sky News and the BBC should be withdrawn and the licence fee repaid to all.
    They could perhaps if they had a Doctor Who Tardis, and by learning Russian be best employed by 1930s Pravda offices based in Moscow.
    Thank God for Twitter

  20. Ed Mahony
    Posted July 23, 2016 at 9:17 am | Permalink

    ‘Talking the economy down’ – is this becoming an over-used phrase?
    Surely, what this country needs is for people to thrash out ideas and debate them openly, freely and fiercely.
    Good economics is about both rooting a business (or country) in economic realities as well as realistic possibilities. And we need to work out is pragmatic reality and what is ideological fantasy. Often a fine line in economics – and often the difference between a business doing well or going bust (and same for a country if its political leaders get it wrong).

  21. JohnF
    Posted July 23, 2016 at 9:29 am | Permalink

    John

    I’ve brought up the issue of the PMI survey on a separate thread and made comments to the effect that the short term prospects didn’t look good. I’ve now read your opinion but, more importantly, have read the Markit literature and it seems you may have a point. The recent PMI data appears to have been gathered from a one off ‘flash’ survey immediately following the referendum vote. The survey is a measure of sentiment rather than actual data.

    • Mark Watson
      Posted July 24, 2016 at 7:00 am | Permalink

      The survey was from July 12 -21

  22. graham1946
    Posted July 23, 2016 at 9:30 am | Permalink

    When will the government stop making our financial contribution?

    Looks like they are not bothered about pouring our billions down the drain by the speed at which they are not going, so the answer is ‘not anytime soon’. The announcement that they are not too bothered about balancing the books anymore is also an indication that they are in no hurry to save this money.

    Funny how they don’t mind shoveling billions of pounds to foreigners for their schemes in Europe, billions more to despots in foreign aid, whilst pleading poverty when they want to cut payments to our disabled, the bedroom tax and whilst our infrastructure falls apart.

  23. CHRISTOPHER HOUSTON
    Posted July 23, 2016 at 9:37 am | Permalink

    They still do not get it. Why people have stopped believing the “experts”. It is not that people do not believe the wise, intelligent and professional per se.
    It is just that they have collective mouthpiece, the media.
    They ( should “they” be called as Mr Farage terms them “The Establishment “? ). Well a Jacobaea vulgaris by any other name smells just as sweet I guess.

    So, the Establishment, seemingly unknowingly, has a problem with its thought/analysis delivery system: the media.It is now not believed way past the proverbial “You can’t believe what it says in the papers” ( when many people in fact actually did )
    Most people carry a mobile video-creating machine in their pockets; a mobile typewriter; a mobile broadcasting field unit with worldwide immediate transmission. Each is a journalist, a photographer, a media editor, a mass consumption of news executive. Their individual journalistic experiences, collectively gathered, are at odds with the TRUTH coming from the BBC and others. Big style. Ongoing. Increasing.

    • zorro
      Posted July 24, 2016 at 12:48 pm | Permalink

      It is a beautiful, liberating thing which puts the fear of God up them!

      zorro

    • Lifelogic
      Posted July 24, 2016 at 7:54 pm | Permalink

      Their are independent honest and capable experts and there are “government experts”. The latter are employed for providing what the client wants and so that is what they do. Otherwise they are not used again next time.

  24. Jeffery
    Posted July 23, 2016 at 10:39 am | Permalink

    As far as I know, this was the standard ‘flash’ Markit PMI, issued at the usual time for several countries. The full PMI(s) come out at the beginning of August. Markit might be faulted for their fevered press release, but otherwise nothing of special note. In fact a 5 point fall actually seems quite small, given the turmoil of the past five weeks. The real question – a blip or something more sustained?

  25. Ed Mahony
    Posted July 23, 2016 at 11:12 am | Permalink

    ‘I see yet more Countries (Brazil amongst others) are now wishing to do trade deals with us’ – if we had great brands such as Apple we wouldn’t have to worry so much about ‘trade deals’. The reality is that we’re not creating these types of brands or rather, not enough. Therefore people in business have to work harder to promote and sell their stuff. This is harder if you live miles away from that country, and it takes longer and is more expensive to ship your products. Donald Trump also said in the convention something I strongly agree with, ‘bad trade deals cost jobs.’ I’m obviously against protectionism. But if we make trade deals, they have to be the right ones, and this can be incredibly difficult to achieve in itself. Also, do we have to the time and the money saved up to take our time with trade deals? And do we have the experts to execute these trade deals (no, and will take some time and money to train up an effective team)? And instead of countries outside our immediate geo-political sphere gaining from trade with us, wouldn’t it be better – for geo-political reasons – for those countries nearest to us to gain from trade with us?
    I’m happy for people to change my perspective, but so far, the more I examine Brexit, the more deep flaws it seems to have, and the more it seems to depend on a wing and prayer.
    (Yes to strong reform of the EU, but no to turning out back on the EU).

    Reply In the EU or out of it we need to find things to sell abroad all the time we want their imports! In the EU for 43 years we have run massive trade deficits with the rest of the grouping – it has not been a free or easy ride

    • Denis Cooper
      Posted July 24, 2016 at 9:08 am | Permalink

      So myopically turn your back on the rest of the world instead, even though that’s about 93% of people and about 80% of economic output.

  26. Liz
    Posted July 23, 2016 at 11:41 am | Permalink

    The hysteria of some of the news media, still in a deep sulk at having got the result of the referendum so wrong, at this survey was incredible. Why would any normal person, whatever their views or occupation, wish to bring their country down as these people seem to want to do?

    • Anonymous
      Posted July 24, 2016 at 7:34 am | Permalink

      This isn’t merely a sulk. It is a powerful and effective movement to have a second referendum pushed on us.

  27. Bob
    Posted July 23, 2016 at 1:10 pm | Permalink

    They’re probably worrying about their French holiday homes and think they can scupper Brexit through a constant drip drip of negativity. All the more reason to step up the pace and repeal the ECA.

    I wonder how many of these purchase managers are currently stuck at the French border because of the stricter controls imposed after an 18 y/o from Iran with mental health problems closed down Munich with a 9mm pistol.

  28. Atlas
    Posted July 23, 2016 at 2:32 pm | Permalink

    I noticed the FT was whingeing away today about this. The remainers are in total denial – how sad.

    • Newmania
      Posted July 23, 2016 at 8:27 pm | Permalink

      You have to remember that the Brexit vote was strong amongst the retired and poorly educated . They are not the ones who will be clearing up the mess
      it is entirely obvious that trhe sort of person who says thing s like ” Hey so you lost your biggest client ..find another one , be positive” …has never actually had to do such a thing.
      Relationships take years to build compliance and workable methods are con structed over decades with probalem en route . The UK is expertin this sort of thing and you will no-one picking up thje pices with anything other than contempt for the parasites who have just cost us so much the country may never recover

      Reply What an outrageous slur and false statement. There were many well educated Leavers who employ people and are responsible for businesses – Hargreaves/Bamford/Dyson etc who see Brexit teeming with economic opportunity. In a democracy everyone has a vote of equal value, whatever their level of education. I am glad I do not live in a country where you have to go to Eton and Oxford to be able to vote. Do you not have any democratic instinc5ts in you?

      • Cheshire Girl
        Posted July 24, 2016 at 7:04 am | Permalink

        Newmania:

        It certainly is an ‘outrageous slur and false statement’!

        Many of the retired who voted for Brexit had run successful businesses, and were well educated. You should remember that the UK was a successful and independent country before we entered the EU. Your comment about ‘parasites’ was particularly offensive. It was a free vote and just because you voted to Remain it doesn’t mean that everyone who voted to Leave was wrong, and the effort by yourself and others, to make the Leavers feel guilty should cease forthwith!

      • The Active Citizen
        Posted July 24, 2016 at 7:12 am | Permalink

        Dear oh dear, Newmania. Presumably if I were retired or poorly educated you wouldn’t be interested in my comments. Unfortunately for you I work and was fortunate to have had an excellent education, so you may decide to read this.

        I not only voted Brexit but campaigned hard for it and put a 6-figure sum into the fight. I own companies in the UK and in EU countries, and I certainly know how valuable clients are. I’ve created jobs and wealth for very large numbers of people over many years – have you?

        Your arrogance is, I’m sorry to say, typical of many of the cosmopolitan elite. If I were retired and hadn’t been lucky enough to have had a great education, my vote would STILL have been the equal of yours.

        Thank heavens for the sound common sense of the majority of the population who weren’t brainwashed by the EU nonsense, as you appear to have been. I urge you in future to re-evaluate your understanding of democracy and to begin to respect the views of others.

        Reply Indeed. Presumably he reads my views because I have a job and did manage to go to university despite my views.

      • Anonymous
        Posted July 24, 2016 at 7:53 am | Permalink

        Newmania – EU orientated companies might have settled comfortably in the single market (as EU politicians settled comfortably in the EU political system.)

        With it came free movement and free movement is what the people have rejected. Why ? Because they are paying the costs for big businesses.

        If business is effectively being subsidised through welfarism, compressed wages, loss of living space and stretched resources to make the EU work for them then they need a rocket up them.

        To the people imported poverty is exactly the same as lost jobs.

        You put them in a position where they had nothing to lose.

        What do you propose next ? That they should not be allowed to vote ? It certainly seems so.

        In any case.

        I have never looked up a PPE/Sociology expert in Yellow pages. I have plumbers though, and paid them good money.

        Degrees aren’t what they used to be. How many of the ‘educated’ Remainers are actually properly educated ?

        • Anonymous
          Posted July 24, 2016 at 7:54 am | Permalink

          Newmania – You also ignore the coming EU fiscal (tax) union and the fact that southern Europe is an economic disaster zone which we are liable for in the EU.

      • zorro
        Posted July 24, 2016 at 2:18 pm | Permalink

        Reply to reply – I claim my £5…. Newmania is clearly bazman in disguise ;-)…. Seriously, I suspect that Newmania is a wind up merchant!

        zorro

  29. NickC
    Posted July 23, 2016 at 2:54 pm | Permalink

    I am baffled as to why Theresa May’s government is making such heavy weather of leaving the EU. We can patriate the EU Regulations with a simple bill, as a temporary measure, to keep our complex modern state functioning. We then repeal/replace/modify the Regulations to suit us, as time permits.

    As for only having access to the Single Market provided we supinely accept free movement of people – that is a joke. We want access to the SM; the EU countries want access to the UK market. That is the trade off, starting with the WTO tariffs as a baseline. A trade tariff deal between the EU and the UK should be treated in the same way as trade deals with any other country, of which about a dozen are lined up already.

    All the rest is restoration of sovereignty for which we have just voted. Whether farming, fishing, immigration, regional policy, taxation (inc VAT), foreign affairs, defence, world trade deals, or any other policy, the UK is now in control of its own destiny, no different to all the other independent nations in the world.

    • Newmania
      Posted July 23, 2016 at 8:21 pm | Permalink

      We want access to the SM; the EU countries want access to the UK market. That is the trade off, starting with the WTO tariffs as a baseline.

      That’s so sweet 60 % of Uk exports go to the EU.5% of EU exports go to the UK. The EUs economy is about 7.5 the size of ours . If as you say we apply WTO tariffs to wine and BMWs that would be a nuisance for Germany and France but if we are blocked on exporting Insurance Banking Accounting IT Hi tech compliance dependent products to our largest trading partner then we have bought a ticket to the dark ages.
      How do you like that negotiating position? Why did you vote for it ?
      The status quo is that non EU member good s and services are simply that and remember that a trade war with the UK has real advantages for the EU, it can hardly lose can it . Politically it gets the project back on track but much more tempting is repatriating EU based R and D Banking et al to Frankfurt and Paris .
      We know the French have wanted to do this for a long long time anyway , we have isolated ourselves form any friends we once had , there are plenty opf people licking their lips at the prospect of taking advantage of our stupidity
      I expect us to go into recession latter this year but that is nothing compared to what is going to happen when the awful reality starts to unfold

      Reply We will not go into recession later this year. Have you apologised yet for all the wrong forecasts about what shares, bonds and interest rates would do after the Brexit vote made by your side in the referendum?
      The UK is not small or alone when dealing with the EU. Under WTO rules the EU cannot ban our services, and has to trade with us on no worse terms than the EU trades with the USA/China etc. We have the strength of the rest of the world on our side when dealing with them. The rest of the EU wants financial passports into London.

      • Anonymous
        Posted July 24, 2016 at 8:02 am | Permalink

        Better get your house on the market and quick about it, Newmania.

      • Denis Cooper
        Posted July 24, 2016 at 8:25 am | Permalink

        https://euobserver.com/tickers/134414

        “US hedge funds get EU passport

        By EUOBSERVER

        19. JUL, 18:41

        The European Securities and Markets Authority (ESMA) in Paris Tuesday said US hedge funds can get a “passport” to operate across the EU because there is no risk of “market disruption”. The ESMA verdict bodes well for the City of London, which is likely to undergo the same vetting process after the UK leaves, Leonard Ng, a partner at law firm Sidley Austin in London, told the Reuters news agency.”2

      • JohnF
        Posted July 24, 2016 at 10:50 am | Permalink

        ” That’s so sweet 60 % of Uk exports go to the EU.5% of EU exports go to the UK. ”

        Can you provide source for your figures because I think they’re garbage.

        • zorro
          Posted July 24, 2016 at 5:33 pm | Permalink

          Most definitely nonsensical figures…..

          zorro

      • NickC
        Posted July 24, 2016 at 11:07 am | Permalink

        Newmania, Your figures are incorrect. According to the government’s pro-Remain white booklet 8% of EU exports go to the UK, not 5% still less 0.5%. The booklet states 44% of UK exports go to the EU. This is then reduced to about 40% by the Rotterdam effect, resulting in about 10% of UK GDP, or 3 million jobs out of 31 million (confirmed by Remain).

        However, percentages disguise the monetary (hence jobs) value. The EU exports about £70billion more to the UK than we export to them. This means the EU has about 5 million jobs dependent on exports to the UK, compared to our 3 million. Even that disguises specific high value figures. The UK exports about 800,000 cars to the EU every year, but German owned car-makers alone sell 1.3million cars to the UK.

        As John Redwood stated under WTO rules the EU can’t ban our exports. Moreover the UK is about the same size as the USA for EU exports, and the EU was willing to negotiate TTIP with the USA. Even more to the point, the EU itself admits that the Services Directive 2006 is not fully implemented. The EU’s figures are that services account for 70% of EU GDP, but only 46% of EU GDP is currently covered by the SD. So the UK was already at a disadvantage before the referendum – the position you are advocating

        How do I like that negotiating position? It seems pretty good to me.

  30. APL
    Posted July 23, 2016 at 4:24 pm | Permalink

    JR: “The signs I see suggest there will be no recession.”

    There will be no recession as a result of BREXIT, not least because BREXIT hasn’t happened and probably won’t for at least two years – the negotiating period of an Article 50 notification.

    Now, we are in a recession though. Have been for years, nearly all the indicators are showing as much, … except possibly the Stock market. Well, all that funny money the government gives to the Banks, has to have an effect somewhere.

  31. Newmania
    Posted July 23, 2016 at 7:53 pm | Permalink

    I think many of us on the sane side of the civil war despair of the ultra Nationalist attitude to evidence . This is how it works
    The pound goes up …. yay good old Brexit
    The pound goes down- Yay good for exports , thanks to Brexit
    Pound stable – Told you Brexit would not make any difference

    Debts interest low – yay more confidence in the UK , cheap money – well done Brexit
    Yields on Bonds up – Yay money flooding out of safe haven, well done Brexit
    Yields unchanged – So much for project fear –well done Brexit

    Deficit reduction target missed – Yay hated austerity anyway – well done Brexit
    Deficit reduction target achieved – ..all thanks to … you guessed it
    Loss of confidence says survey – ha part of the lick spittle counter Brexit traitor plot to be discounted
    Mark Carney – See above
    IMF- See above

    It isn`t confidence or otherwise that is the issue . It is the loss of the single market in a Nation dependent t on selling services banking and compliance dependent manufactures
    I really start to wonder if John Redwood understands what pays for everything in this country

    And as night follows day ….

    “There is no need to move to a government surplus by 2020-21”

    …………….We are sticking the bill for Brexit on the tab for young people to pick up. If only I was even slightly surprised . If we don`t skate close to debt at 100% of GDP by the time we are actually on the elevator to hell I will be pleasantly suprised .

    Reply You can invent as many positions as you like, but it does not make most of these mine! I see you are trying to write more for this site than I do.

    • APL
      Posted July 24, 2016 at 8:04 am | Permalink

      Newmania: “We are sticking the bill for Brexit on the tab for young people to pick up.”

      Apart from being wrong …

      The tab has been running long before Brexit, but it was Brown and his dash to ‘save jobs’ in his constituency in ’08 that really started the tab escalating.

      BREXIT, wasn’t ever an economic issue. It was one of self government, now our young people, yes the same one’s that couldn’t be bothered to vote in the referendum, once again have the chance to govern their own country, in their own best interests.

  32. Adam
    Posted July 23, 2016 at 8:18 pm | Permalink

    Sometimes when a big change of direction happens there are a lot of external costs. The eceonomy has to readjust.

    It’s like when a corporation fails and collapses. Nobody believes those workers won’t find new jobs. But everyone understands it might take some time.

    One thing I note is how the measure we are being asked to use to judge the effectiveness of our economy keeps changing.

  33. Robert Hutley Esq. O
    Posted July 23, 2016 at 10:18 pm | Permalink

    No surprise that there are people talking down our great country for their own short term financial benefit. It is time for us to stand shoulder to shoulder and promote the medium to long term huge benefits of this unique change. The whole world is talking about it and only inward looking protectionist Europe is reacting negatively. Britain’s interests have always been worldwide historically with little ambition in terms of hegemony in Europe (unlike some!). Some politicians with long term vision (such as yourself) watched and warned about the post-Maastricht descent. It is wonderful that people have listened at last. Don’ let the ignorant and self-interested deflect us from this exciting course.

  34. turboterrier
    Posted July 23, 2016 at 11:12 pm | Permalink

    The media never seem to be negative about dictatorship Scotland and its Empress who in reality should be more interested in the state of her country than trying to break away from Westminster and jump onto the sinking EU barge.

    Scotland’s figures are lamentable:

    Production contracted by 1.2%
    Construction down 1.5%
    Economy growth 0.6%
    Manufacturing for year fell 5.4%
    Economy set to grow 0.3%

    Still the English will get the blame as usual!!

    If they keep under performing like this they will drag the rest of the UK down and cost us millions. They will hold us back when the shackles of the EU are thrown away. Can or will we be able to afford it. Westminster or Brussels are both seen as source of funding nothing more nothing less. They do not seem to understand where the money came from in the first place.
    She wants Independence she is having a laugh.

  35. Lindsay McDougall
    Posted July 23, 2016 at 11:58 pm | Permalink

    I see no reason to depart from the programme of steady reduction of the fiscal deficit. Empirical evidence suggests that £20 billion is the most that can be shaved off in a single year. It will become increasingly difficult to maintain all that ring fencing in the 2015 manifesto, and it is high time that the bleeding hearts on the Tory back benches woke up to this fact. Mr Hammond, please note.

    We cannot guarentee that interest rates will remain low – inflation is already creeping up – and the reason for steadily reducing the deficit is that we need State debt to peak at no more than 90% of GDP.

    In Italy, it has crept up to 130% and the Italians are on a banker’s ramp. They claim that their budgets are in primary surplus but that debt interest turns each surplus into a deficit. And in Greece, it is 200%.

    Reply UK state debt is around 60% of GDP if you take into account the fact that we owe £375bn of it to ourselves as the Bank has bought it up for us.

  36. Roy Grainger
    Posted July 24, 2016 at 4:08 am | Permalink

    Free movement to France doesn’t seem tone working that well at the moment even though we are still in the EU.

  37. Peter
    Posted July 24, 2016 at 7:58 am | Permalink

    Thank you John for the latest comment on Project Fear – It would be good to have a resource for all the -tive “stories” that are later quietly ignored… For example, the BBC tweet on the 24th June which had to be officially refuted by Morgan Stanley.

    https://twitter.com/BBCBreaking/status/746326583942782976

    MS statement

    http://www.reuters.com/article/us-britain-eu-banks-morgan-stanley-idUSKCN0ZA2KY

  38. JohnF
    Posted July 24, 2016 at 9:43 am | Permalink

    I’ve changed my mind again about the PMI survey. I think they may have captured a post-referendum slowdown. JR criticises the “early PMI” but that’s even more true of the BoE report and the latest economic data. The BoE update only really covers the period leading up to the referendum though they do say there was some “intelligence gathering” just after. The PMI covers a period of 2 weeks in July and does use actual data. It might be a short term blip and any slowdown might not be as sharp as the data suggests but I suspect it’s real.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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