Yesterday saw the ONS publish the output figures for the second quarter, which they revised upwards to growth of 0.6% for the three months, 2.2% higher than the previous year. This is right in line with the Treasury March forecast before they slashed it as part of Project Fear.
More importantly we also got their first version of the July service sector output figures, the first full month after the vote. This was the month where the gloom mongers said we would see a sharp shock into recession as confidence was undermined by the UK decision. Instead the service sector grew by 0.4% on the month, and by a lively 2.9% over the year from July 2015. As services are 80% of total GDP, this augurs well for general growth in the economy.
I am sticking with the Treasury March forecast of 2.2% growth for 2016 as a whole, and see no reason to revise that forecast downwards. I note that many of the official forecasters and the Investment banks are busily revising up their stupidly low for casts for 2016, made as part of their belief that there would be a large confidence effect from a Brexit decision. It is difficult to get to a short term post Brexit recession from those July figures. August may not have seen similarly fast growth, but it did not tip us into recession from 2.9% annual growth a month earlier!
There were also surveys yesterday showing growing confidence in business as well as amongst consumers. I am always less inclined to trust surveys, given how misleading the surveys taken a few days after the vote were. What seems to be happening is those answering the questions seem to be wanting to get their answers more into line with the reality on the ground, after letting off steam and anger about the vote in its immediate aftermath.
The previous Chancellor did take actions in March against Buy to let, against purchase of dearer houses, and against insurance policies which are still having some negative impact. The Chancellor has recently announced he sees no need for the special help with borrowing to buy a second hand home, and will be withdrawing parts of the Help to Buy scheme. There’s a sign of confidence for you.