- Moody’s says the impact of Brexit on UK gross domestic product is “more benign than the pre-referendum forecasts.”
- The credit ratings agency’s chart shows actual GDP vs pre-referendum predictions.
- Doomsday hasn’t shown up … yet.
An analysis of Britain’s creditworthiness conducted by Moody’s, the debt rating service, shows that the impact of Brexit on UK gross domestic product is “more benign than the pre-referendum forecasts.”
The chart – which shows UK GDP indexed back to 2015 – features actual GDP growth in green, alongside pre-EU referendum forecasts from the Office for Budget Responsibility and Her Majesty’s Treasury. Actual GDP is only one point away from the pre-vote forecast; but the OBR and HMT forecasts are far wide of the mark.
Colin Ellis, Moody’s chief credit officer EMEA and co-author of the Brexit Monitor, told Business Insider, “Although Brexit’s impact on UK GDP has been relatively muted since the 2016 referendum, it has become more pronounced in recent months. That said, it is still more benign than forecasts before the UK voted to leave the European Union and is in line with our pre-referendum baseline scenario of a modest but manageable economic impact.” Moody’s rates UK credit as “Aa2 stable.”
The chart will be greeted with cheer by Leavers, who believe that the government and the media are conducting a “Project Fear” campaign against Brexit by suggesting that leaving the EU will wreak economic havoc on Britain. As evidence, they cite Bank of England Governor Mark Carney’s belief that the risk of a no-deal Brexit was “uncomfortably high.” His remarks have helped drive the pound below USD$1.30 for the first time in about a year.
Moody’s said that while the UK’s progress has been surprisingly strong so far, the full effects of Brexit have yet to kick in. “Business activity appears to be weakening alongside recent deterioration in consumption indicators,” its presentation said.