Britain is likely to scrape by without any economic contraction this quarter and seems almost certain to avoid a recession this year. Few could have hoped that the immediate Brexit squall would blow over so quickly.
The record one-month jump in services activity in August clinches a spate of remarkably resilient figures, more or less neutralizing the cascade of crashing indexes in July.
Markit’s combined gauge of services and manufacturing is back up to 53.6. This is higher than it was before the referendum vote, and higher than it is currently in the eurozone, where Schadenfreude has proved short-lived. It is no longer implausible to suggest that the U.K. economy might outperform the eurozone this quarter, and nor should this be a great surprise.
The 12pc drop in sterling against the euro – compared to its trading range earlier this year – is a macro-economic stimulus for Britain. It is a form of macro-economic tightening for the eurozone, creating an extra headwind as it struggles to break out of a deflation trap.
This post was published at The Telegraph