The UK’s vote to leave the European Union has had little impact on the country’s economy so far, according to a new assessment by the Office for National Statistics (ONS).
Some surveys carried out in the days and weeks immediately after the result suggested a sharp fall in consumer and business confidence. However, while the post-referendum picture is still emerging, there has been no sign of a major collapse in confidence, the statistics agency said on Wednesday. In fact, within the data available, there are some indicators of strength.
The fall in the value of sterling has had little effect on prices so far. Producers saw prices of material and fuel rise in July and August at about the same rate as in the previous two months. There is little sign yet of an effect on factory gate or consumer prices. Meanwhile, house price growth remained strong in July.
Manufacturing output was down 0.9% in July, after similar falls in May and June, but following large growth in April. Manufacturing output has continued at similar levels within a narrow range since 2012, the ONS reported.
Construction output was flat in July, continuing a trend of broadly flat output growth since the start of 2015.
The ONS also noted that the UK’s goods deficit narrowed by £1.2bn in July, but said that this is unlikely to reflect improved trading conditions from the depreciation of the pound. Order and delivery lags mean that any such impact would take longer to emerge.
Consumer confidence seems to be holding up: there was a slight drop of 0.2% in spending in shops and online in August, but this followed strong growth of 1.9% in July.
“So far there are no signs of a sharp collapse in consumer confidence as some early fears had suggested,” the ONS stated.
The continued high employment rate of 74.5% for the three months to July also illustrates the strength of the UK economy in the run up to and immediately after the EU referendum.
New data on the services sector and business investment will help provide a clearer overall picture, however.
ONS chief economist Joe Grice commented:
“As the available information grows, the referendum result appears, so far, not to have had a major effect on the UK economy. So it hasn’t fallen at the first fence but longer-term effects remain to be seen. The index of services published soon and the preliminary estimate of third quarter GDP, published at the end of October, will add significantly to the evidence.”
Wednesday’s report was the first in a series of special assessments of the UK’s post-referendum economy by the ONS. The statistics agency said that it would continue to provide commentary and analysis on the economic context and trends following the referendum outcome, based on the growing evidence over the coming months.