FOR some time Britain’s vote in June 2016 to leave the European Union appeared to be having little economic impact. Sterling slumped but GDP growth in the second half of 2016 was faster than in the first. Unemployment fell,rather than jumping, as most economists had feared. Yet the notion that the economy would escape Brexit uncertainty was always fantastical.
Britain’s economy has gone from a leader to a laggard internationally, or as GDP growth has slowed sharply (see chart). As The Economist went to press,the monetary-policy committee (MPC) of the Bank of England was expected to leave its benchmark interest rate on hold at 0.5%. The economy is deemed too feeble to manage with higher borrowing costs.
A few factors explained the economy’s outperformance in the immediate aftermath of the referendum. The government eased fiscal austerity. In August 2016 the Bank of England nick interest rates to 0.25%. fortunately, around the same time the world...
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Source: economist.com