ECONOMY
No evidence Brexit has hurt UK economy
The FTSE 100 closed above 6,700 for the first time in over 11 months after a Bank of England survey showed “no clear evidence” of a sharp Brexit-induced economic slowdown while the pound climbed to an intraday high of $1.3198, up 0.6%. The report found the majority of firms spoken to do not expect the Brexit vote to have an impact on their capital spending and few planned to change their hiring intentions or pay decisions while banks had maintained their appetite for lending. However, some foreign direct investment is being postponed, some firms are considering locating parts of their business elsewhere in Europe, and a third of all businesses expected some negative impact on their recruitment and investment plans over the next year, the report stated. Writing in the Telegraph, MPC member Dr Kristin Forbes advocates a “Keep Calm and Carry On” approach to monetary policy, suggesting more data is required before a decision is made on using BoE stimulus tools.
IMF cuts UK growth forecast
The IMF has cut its forecast for UK growth next year after warning that the decision to leave the EU has damaged Britain’s short-term prospects and “thrown a spanner in the works” of the global recovery. The fund said it expected the UK economy to grow by 1.3% in 2017, 0.9 points lower than a previous estimate made in its April. The IMF predicted global growth of 3.1% in 2016 and 3.4% in 2017, both of which are 0.1 points lower than forecast in April. “The vote has caused significant political change in the United Kingdom, generated uncertainty about the nature of its future economic relations with the European Union and could heighten political risks in the European Union itself,” the IMF stated.