Standard & Poor’s ratings agency noted on Monday that the U.K’s appearance of a post-Brexit bounce may be a short lived “mirage” due to ongoing uncertainty regarding negotiations with the European Union which are outstanding and could negatively affect business investment.
Sophie Tahiri, an economist at S&P Global Ratings, said:
“While the news is encouraging, we believe it has no bearing on the cloudy longer-term outlook for the UK economy.”
Consumers in the U.K. appear not to have let concerns over Brexit halt their spending following the vote after many businesses reporting a slump prior to the vote and then a bounceback in August.
Numerous economists have changed tack on their negative forecasts on the country’s economy after positive data boosted sentiment. All three core purchasing manager surveys of construction, services and manufacturing saw positive results.
Morgan Stanley and Credit Suisse Group AG both changed their forecasts after Goldman Sachs Group Inc. said the U.K. economy will perform better than economists predicted. Changing from their previous forecast of a recession, Morgan Stanley released a statement on Tuesday outlining expectations of 1.9 percent growth compared to previous predictions of 1.2 percent. Goldman Sachs projects 0.9 percent growth in 2017, up from 0.2 percent it had forecast before whilst Credit Suisse said it no longer believes the economy will contract in 2017.