Can you identify any impact of Brexit on the economy?
You can find evidence of a British economic slowdown, if you look hard enough
By C.W. | LONDON
A PROBLEM facing economists is that it won’t be possible to assess the macroeconomic impact of the Brexit vote for quite some time. The official estimate of GDP growth in the third quarter of this year will not be published until late October.
More annoyingly, this estimate will not have a detailed breakdown of what’s going on in the economy; we will have to wait until late November for that. We won’t get any hint of the impact on unemployment until around September. However, there are high-frequency data which, unfortunately, paint a very worrying picture.
Journalists and economists look to financial markets as a decent proxy of what the economic damage will be. For instance, the collapse in housebuilders’ shares is consistent with a 5% fall in house prices next year, based on historical data, according to Samuel Tombs of Pantheon Macroeconomics, a consultancy.
However, one big problem is that financial markets are all over the place at the moment. A release from Citi, a bank, yesterday said that markets were now “bored” of Brexit. After all, Britain is not even in the process of formally withdrawing from the EU. And markets have other things to worry about. So markets are not a perfect guide.
What other data can you look at? One option is high-frequency data on actual economic activity.
For instance, Rightmove, a big property-search website, has information on property listings that is constantly updated. New listings were up 1.3% on Friday-Sunday following the Brexit vote, compared to new listings the previous Friday-Sunday. This is consistent with the idea that people are keen to sell their houses quickly before prices fall. Which suggests house prices will fall.
Then, take a look at data from Adzuna, a job-search website. Their count of new job ads put up on Monday was 29,000 compared to 39,000 last Monday, a worryingly large fall of 26%. The count of new ads over the past seven days is 570,000, compared to 615,000 the week before (a 6% fall). Employers, it seems, are already less keen on hiring.
Now, of course, it is important not to place too much weight on this data; over such short timeframes it is going to be volatile. But it does give a taste of where the British economy is heading.
