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UK economy's post-Brexit vote rebound a mirage, warns credit ratings agency

Published 12/09/2016

The UK economy is set to suffer, particularly when it comes to investment, Standard and Poor's said
The UK economy is set to suffer, particularly when it comes to investment, Standard and Poor's said

Standard & Poor's has panned recent positive economic data showing the British economy is holding up following the Brexit vote, dubbing it a "mirage" and warning of a "cloudy" outlook for the country.

The credit ratings agency said that despite a barrage of positive economic data for employment, retail and the services and manufacturing sectors, "it has no bearing on the cloudy longer-term outlook".

"Any celebration about the rebound in August and conclusion that life has returned to 'business as usual' may prove to be premature or even a mirage," S&P said.

The agency said that the UK economy is set to suffer, particularly when it comes to investment.

Sophie Tahiri, economist at S&P Global Ratings, added: "The uncertainty surrounding the UK's future outside of the EU and the associated economic risks, which we think are pronounced and predominantly skewed to the downside, will gradually take its toll, particularly on investment, as businesses start dealing with the new Brexit reality."

S&P's comments come after several economists raised their growth forecasts after Brexit uncertainty eased last month.

The Bank of America Merrill Lynch said Britain is on course to dodge recession, while PwC, Morgan Stanley and JP Morgan all upgraded their economic expectations for the UK economy.

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