Waiting for the Other Shoe……

Brexit throws 'spanner in the works' of global growth.

The International Monetary Fund (IMF) has said the UK's decision to leave the European Union has "thrown a spanner in the works" of its global growth forecast. Instead of predicting 3.2% growth in 2016, the IMF's World Economic Outlook (WEO) now expects only 3.1%. It says the UK will be the worst affected of all the advanced economies. Its 2017 UK growth forecast has been slashed from 2.2% to 1.3% and this year's has been cut from 1.9% to 1.7%. The IMF's global growth forecast for 2017 has also been revised down from 3.5% to 3.4%. Before the referendum vote on 23 June, the IMF says that the global economy had been showing promising signs of growth.

The IMF also highlights the stresses that Brexit may cause within the European banking system, particularly in Italy and Portugal. It says: "The Brexit vote implies a substantial increase in economic, political, and institutional uncertainty, which is projected to have negative macroeconomic consequences, especially in advanced European economies." However Mr Obstfeld added: "The real effects of Brexit will play out gradually over time, adding elements of economic and political uncertainty that could be resolved only after many months. This overlay of extra uncertainty, in turn, may open the door to an amplified response of financial markets to negative shocks."

Brexit: Theresa May says talks won't start in 2016.

Theresa May has said the UK will not begin official negotiations on leaving the EU this year as she held talks with Germany's Chancellor Angela Merkel. Speaking in Berlin, the PM said securing a "sensible and orderly departure" from the EU would take time. But she insisted the UK would not "walk away" from Europe and wanted to retain the "closest economic links". Mrs Merkel said the two sides desired to get the "best result for Britain" but urged more clarity on timing. Earlier, a military guard of honour greeted Mrs May, who succeeded David Cameron a week ago. At a joint press conference, Mrs May said the UK was in no rush to trigger the two year process of leaving the EU - telling reporters that although "this would not please everyone" it was right to hold off until the UK's "objectives were clear".

EU migrants may face 'right to stay' curbs - David Davis.

EU migrants who come to the UK as Brexit nears may not be given the right to stay, David Davis has said. The new Brexit secretary told Sky News there might have to be a cut-off point if there was a "surge" in new arrivals. But he said setting a date now could in itself prompt a "rush" of people moving before any deadline - and any steps must be compatible with EU law. It comes amid pressure on the government to guarantee the right to stay to EU citizens already in the UK.

Brexit 'will be horrible for UK economy' - fund manager.

The vote to leave the European Union will have a "horrible" impact on the UK economy, which could "judder to a halt", a leading fund manager has said. Richard Buxton, chief executive of Old Mutual Global Investors (OMGI), described Brexit as "really bad news". He told the Guardian he feared the move could lead to a recession. Financial markets would remain volatile while the government negotiated an exit deal with the EU, Mr Buxton added. OMGI has managed funds worth £26bn for both institutional and individual investors. Speaking to the newspaper, Mr Buxton said the stock market had priced in a "pretty significant recession" for the UK given the slide in share prices of companies such as house-builders and banks. Shares in two of the UK's biggest house-builders, Barratt Developments and Persimmon, have fallen almost 30% and 25% respectively since 24 June - the day the referendum result was announced. "I think the economy is going to judder to a halt [or] have a mild recession, but I don't think it is going to be as severe as some of these shares are pricing in... The real economy is only going to gradually emerge over the next three to six months," Mr Buxton said.

Brexit fallout to hit UK economic growth: EY Item Club.

The UK economy may face "severe loss of momentum" after the vote to leave the EU, according to the EY Item Club. The think tank's UK growth forecast for 2016 has been cut from 2.3% to 1.9%, and from 2.6% to just 0.4% for 2017. Meanwhile its forecast for GDP growth for 2018 was slashed from 2.4% to 1.4%. Its report said the Brexit vote would have "severe confidence effects on spending and business investment", which would lead to anaemic GDP growth over the next three years. However, the drop in the value of the pound could bolster exports by 3.4% next year, the Item Club said, with imports falling by 0.3%. Overall, the move would see net exports adding 1.1% to GDP in 2017, it added. "Heightened uncertainty is likely to hold back business investment, while consumer spending will be restrained by a weaker jobs market and higher inflation," he said. "Longer-term, the UK may have to adjust to a permanent reduction in the size of the economy, compared to the trend that seemed possible prior to the vote. But amongst the gloom, the weaker pound provides one silver lining to exporters, particularly those selling to the US and emerging markets."

[Well despite some avid whistling next to graveyards and attempting to drown out the noises from the Markets with cheerful shouts of ‘Brexit Now!’ it seems that the first tentative results are less than positive. Of course economics is a bit like history – you can only really say what happened sometimes long after the actual event. With only 5 weeks since the vote to leave the EU it’s really still too early to tell what the impact will be when we finally do leave at some point in the next 2 years. I’m hoping that it won’t be as bad as some people are still predicting. Unfortunately I’m a cynic and a sceptic so I’m expecting a disaster. However, I can imagine things getting pretty bad. So (hopefully) my worst fears will never materialise!]

All details above from BBC News website.