Laugh or Cry

Doing our shopping I always glance at the newspaper headlines. I was first of all stunned by the Daily Express and then unsure whether to laugh or cry. They cite the good growth figures pre Brexit as proof that Brexit is working. This is so untrue it defies any sane interpretation.

The truth appears to be that the stock market has done fairly well but the real economy very badly. The odds on a recession are 50:50. Certainly there was a remarkably positive reaction once the initial dismay was past but no one seriously foresees anything but trouble.

It is worth noting that one reason for the "make the most of what we've got" reaction in business is that Theresa May is a reasonably sane PM and so is Hammond as Chancellor. The real loonies didn't get too close although Liam Fox is a likely trouble maker. I see that he is still suffering from pre referendum illusions although I'm not sure how he will react when exposed to reality.

The Leavers have had a bonus in that the plunging pound has been matched by sliding oil prices so fuel prices are not changing much.

The stock market reaction is actually more nuanced than indices appear. Companies which mainly trade in the UK are down except where they are regulated utilities. There has been a flight to the relative safety of the regulated utilities.The international companies like Unilever which earn almost all their money overseas may profit from a lower pound and have done well. Actually Unilever which accounts in euros isn't a good example, better would be somebody such as Rolls-Royce.