Not only British Chamber of Commerce but also S&P Global Ratings is predicting Brexit impact on UK economy, despite the figures from last month Markit/CIPS PMI for services sectors indicate a sharp bounce. Will the UK avoid a recession?
13 September, AtoZForex – Even though British Chambers of Commerce have downgraded their UK growth forecast, Britain shows signals of strength, as the figures from last month Markit/CIPS purchasing managers’ index (PMI) for services sectors indicate a sharp bounce.
S&P predicts a long-term Brexit impact on UK economy
However, as it was commented by S&P Global Ratings this Monday, the UK’s economic comeback over the summer may be “premature or even a mirage.” The rating agency discourages public regarding the PMI for services sector data, where the hopes that the Brexit had a temporary effect were raised. Sophie Tahiri, Boris Glass and Jean-Michel Si, economists at S&P, believe:
“While the news is encouraging, we believe it has no bearing on the cloudy longer-term outlook for the U.K. economy.
Any celebration about the rebound in August and conclusion that life has returned to ‘business as usual’ may prove to be a mirage, at least in the longer-term It is unclear when exactly the U.K. will start the likely laborious process of quitting the EU, after its people voted by a margin to quit the economic and political bloc. It also unknown what sort of relationship the U.K. might maintain with the EU once it leaves the bloc.”
The leading rating agency forecasted a long-term influence of the Brexit vote, saying it would be felt steadily.
Data creates a “broadly stagnating” economy picture
The economists at S&P also have stated:
“The uncertainty surrounding the U.K’s future outside of the EU and the associated economic risks, which we think are pronounced and predominantly skewed to the downside, is likely to gradually take its toll, particularly on investment, as businesses start dealing with the new Brexit reality.”
The S&P Global Ratings believes that the Brexit impact would be mainly seen in a long-term due to European companies’ holdup on the recruitment and investment procedures.
Firms reported a slide in business in July ahead of a comeback in August. S&P manufacturing, construction, and services sector surveys in July and August indicated that two months are overlapping each other and in the end giving the “broadly stagnating” economy.
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