GDP Data Shows Brexit Not All Gloomy

Brexit GDP Data

Image Courtesy – Katehon.com

Figures released on August 26th show 0.6% increase in GDP for the second quarter of 2016. Although this only covers a short period after the Brexit vote, the data shows a robust economy in the immediate lead up to the vote, giving some hope for the future. Although the result, and consequent limbo businesses find themselves in will continue undoubtedly to be bad for markets in the medium term, investors need to realise that Britain leaving the EU is not the end of the world.

Laith Khalaf, senior analyst at Hargreaves Lansdown, noted that the full effect of Brexit probably won’t be reflected in official statistics until the end of the calendar year. However, employment figures released within the past few weeks have also shown promise, indicating a certain level of resilience in the face of adversity.

Another plus factor in the numbers came in the form of increased business investment, showing a 0.5% higher result than was forecast. This leads analysts more broadly to believe that there is every reason to have confidence in continuing growth of economic activity across the board. As businesses have the will to spend money on a range of improvements in capital equipment, training and recruitment, the general indication is that companies are in a steady position, or possibly are happy with their prospects for ongoing expansion. This is the bedrock of a growing economy.

The fear isn’t justified…

The predictions of the fallout effects from Brexit have largely been catastrophic from the business community, with larger firms threatening to move their operations onto the continent, or to the Irish Republic. However, there have been no large scale moves as of yet, and the assorted costs and hassles of doing so, in tandem with a calmer economic climate in the UK, might well be enough to overcome market fears.

As an investor, it might well be wise to play the long game here. There are going to be inevitable bumps and scares along the road, but it is in everyone’s interests to keep any would be problems in check. We are already starting to see some recovery in the currency market, but there is a long way to go. Panic will only serve to further destabilise economic conditions, and place your own portfolio in harm’s way. Play it safe, dig your heels in and wait it out. It’s the only sensible course of action in this post Brexit world.

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