Following the UK’s decision to leave the European Union (EU) due to the country’s latest referendum, predictions for the future are plentiful. Many forecasts are negative, but the Leave.eu organisation believes there is a ‘great deal’ to be happy about. This needs to be taken with a pinch of salt. Patrick Brusnahan writes
In its latest press release, Richard Tind, co-founder of Leave.eu, said: "We should be very careful we do not talk ourselves into recession. The latest market brief by Global Britain tells us there is a great deal to be happy about regarding the British economy.
"What is required is strong leadership, it is time for politicians to be giving reassurance based on the facts rather than being alarmist to suit their own personal agendas."
He continued: "The FTSE is performing well and has recovered, being higher than it was twelve days ago, while new jobs are being created and companies are confirming their commitment to the UK. That’s the [message] we should be putting out, not doom and despair that will be self-fulfilling."
Much of this statement is disputable, if not wrong.
It seems to be hard to find a ‘great deal’ to be happy about, especially considering that three leading credit rating agencies have now downgraded the UK: Fitch, S&P, and Moody’s. S&P attributed this change in rating to its forecast of an ‘abrupt slowdown’ in growth for the UK.
Bank shares have taken a tumble with Barclays, Lloyds and RBS banking shares down 11.5%, over 20% and 14.2% respectively. These declines caused trading to actually cease with regards to both Barclays and RBS.
The FTSE is indeed higher than it was twelve days ago, but it is actually lower than it was four days ago.
With regards to jobs, at least in the banking sector, creation is not top of people’s minds. Morgan Stanley has had to deny rumours that it plans to move 2,000 staff away from the UK, with more reliable rumours claiming the number to be closer to 1,000. JP Morgan has said it could move up to 4,000 roles away from London, while HSBC believed it could move 1,000 people and Goldman Sachs has confirmed it will move jobs to Frankfurt.
The chief executive of the London Stock Exchange, Xavier Rolet, warned in the lead up to the referendum that 100,000 jobs could end up moving.
If all of this wasn’t bad enough, Rupert Murdoch has described the UK’s decision to leave the EU as ‘wonderful’.