Top ONS economist: Brexit recession still possible
The top economist at the Office for National Statistics (ONS) has warned it is too early to rule out the prospect of a recession, despite a flurry of strong post-referendum indicators.
Joe Grice, ONS chief economist told Bloomberg this morning there were still too many pieces of the puzzle to put together and would not like to suggest the UK economy will avoid an economic contraction.
Grice was discussing the impressive retail sales figures out yesterday and early employment indicators which showed consumer confidence has held up well after the referendum.
Retail sales climbed 1.4 per cent in the month of July, well ahead of expectations for just a 0.1 per cent ascent. The pound jumped 0.9 per cent against the dollar to a two-week high on the news.
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Grice said: "They have a lot of relevance, they are the first hard indication about activity. The figures tell us that the fear people had right after the referendum result that there would be a catastrophic fall in consumer confidence … that doesn't seem to have happened.
"Labour market figures [were also] very strong, stronger than what people were thinking."
In a bid to cool expectations, however, he added: "Does that mean there won't be a recession? Well, no. That story is still to unfold. We know something about the first month of how consumers behaved. We don't know how they will behave as the effects of the falling pound come through, and we don't know how businesses will behave."
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Earlier this month the Bank of England slashed its growth forecasts in the steepest revision since it started publishing them in 1993. It expects growth to flat-line later this year and gave a one-in-three chance that the UK economy would be contract over the next 12 months.
Think tank the National Institute of Economic and Social Research (Niesr) has put the chances of a recession at 50-50.