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I was with Krugman on this, arguing any turnabout would be slow and incremental, and given the strong momentum the UK economy then had, might well take quite some time to become obvious.

I think "Project Fear" was overly influenced by the "confidence fairy" theory of economics - that a downturn in certainty would result in a down in confidence with immediate market and real world economic consequences.

Yes Sterling did devalue radically, reflecting such a loss of confidence but paradoxically also making the UK economy more resilient in the short term.

My concern was always more about investment rather than consumer confidence - all those businesses putting investment decisions on hold pending greater clarity, all the strategic focus being on contingency plans for a hard Brexit rather than current investment opportunities.

By definition, those effects would be slow, incremental, long term, and largely invisible until large scale relocation decisions actually come into effect.

We're only beginning to see those effects now.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Nov 8th, 2017 at 12:59:27 PM EST
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