ALTHOUGH it will take many years, if not decades, for the fall-out from Brexit to become clear, some of the first facts are in and show the UK economy to have shrunk at its quickest rate since the great recession reared its ugly head eight years ago.
The services sector, a largely invisible financial bubble developed in post-industrial Britain, was hit the hardest with a record drop dragging it down to a seven-year low.
Manufacturing dropped to a three year low and a survey of business leaders predicted a shrinking of GDP by 0.4 per cent in the third quarter of the financial year.
“July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009”, said Markit chief economist Chris Williamson.
“The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to Brexit.”
The ominous data comes as new prime minister Theresa May travels across the continent attempting to build bridges and buy time, while Liam Fox, David Davis and Boris Johnson share a 115-room mansion in Kent where they are charged with executing Brexit.
Appearing on friendly terms with German chancellor Angela Merkel, a fellow daughter of the church, May was nevertheless informed that the continent’s leading power intended to “follow the rules”, as observers recalled the warm welcome a hat-in-hand Greek prime minister received before being humiliated by Merkel in later negotiations.
On Thursday May was told in no uncertain terms by French president Francois Hollande that the UK will not be able to access the single market without accepting and implementing the EU’s immigration regime.
“None can be separated from the other. There cannot be freedom of movement of goods, free movement of capital, free movement of services if there isn’t a free movement of people … It will be a choice facing the UK – remain in the single market and then assume the free movement that goes with it or to have another status,” he said.
Both leaders have, however, appeared to soften their approach to Britain’s delaying tactics over invoking Article 50 and thus setting the EU divorce proceedings in motion.
Before May came to the helm, European leaders had demanded that the government initiate Article 50 without delay so as to attempt a quick, clean Brexit with minimum scope for further disintegration within the union, but now acquiesce with May’s plans for an early 2017 start.