Brexit is failing to massively hold back job creation and spending in Britain
Elga Bartsch and her team at Morgan Stanley said in a note to clients that while Britain voting for Brexit has caused concern over how companies may cut jobs or stop hiring people until the prime minister Theresa May triggers Article 50, and therefore starts the two-year negotiation process for a Brexit, firms are still spending money and hiring.
This is the key passage from Bartsch and her team (emphasis ours):
"At end-2016, hiring intentions across different sectors of the economy, which we use to predict employment growth, show that companies remain in hiring mode and on average plan to expand staff levels in the next three months. Thus far, companies have only scaled back the pace of their hiring though. As a result, consumers are not overly worried about the risk of becoming unemployed over the next 12 months.
"With GDP growth likely to stay above potential, we expect job creation to continue and the unemployment rate to fall towards the Non-Accelerating Inflation Rate of Unemployment (NAIRU), estimated to be ~9.0% of the labour force, even though the labour force is set to rise faster."
And here is the key chart:
Morgan Stanley also points out that the way Britons are spending their cash show that people are not worried about the jobs market either, even though consumer has slowed a little:
However, while this looks like positive news for those supporting a Brexit, it is vital to note that nothing in Britain has actually changed.
Britain voted for a Brexit on June 23, but until prime minister Theresa May triggers Article 50, completes the two-year deal making process, then exits the UK out of the EU - nothing has changed or will change. Britain's EU membership remains the same in terms of adherence to EU trading rules and so forth.
The reason why economists and analysts predicted a downturn in the economy and impact on spending, investment, and various other elements, is because uncertainty usually makes investors and companies pull back from spending money in order to remain prepared for any nasty economic shocks.
However, the Bank of England lowered interest rates to record lows of 0.25% in August, which has helped keep people and companies spending their money. This is because low interest rates make the cost of borrowing cheaper and debt less expensive to service.
And by the looks of it, people and firms are taking advantage of that and remain optimistic about their employment futures until something more concrete comes out from Brexit talks.
For now, though, Britain has not even triggered Article 5o, so it will be at least over two years from now until we get an idea about what Brexit really means for the UK.