Credit ratings agency Standard & Poor has insisted neither the UK or the Eurozone will experience a Brexit-induced recession, claiming “the sky hasn’t fallen on either side of the Channel.”
S&P, which downgraded the UK from its AAA rating following the referendum vote, cited “quite resilient” confidence indicators and data – included stronger than expected retail figures, low unemployment rates, and household spending levels. The ratings agency also pointed to relatively low inflation.
S&P Chief Economist in Europe, Jean-Michel Six, suggested the rebound in both consumer and business confidence following the vote represented a “sigh of relief” at the absence of an immediate downturn, also citing the swift change of UK leadership and action from the Bank of England (including cuts to interest rates) as factors in helping to ensure the UK would avoid a recession. The conclusions mean S&P joins a body of economic institutions and think tanks that have rejected suggestions the UK will fall into recession, although predictions for the UK’s economic growth slowing in 2017 remain.
