Brexit boom (cont)

Spectacular’ post-poll surge in British factories Now IMF says doom-laden predictions were wrong

MANUFACTURERS have clocked up one of their best months for a quarter of a century as the weak pound boosts exports, figures showed yesterday.

An index of activity in UK factories jumped a ‘spectacular’ five points last month – the joint biggest increase since records began nearly 25 years ago.

Business was boosted by booming demand for goods stamped ‘Made in Britain’ from all over the world.

The report, by research group Markit, said it was ‘business as usual’ for manufacturers. It adds to the positive economic data confounding warnings from Remain campaigners of disaster in the event of a Brexit vote.

The International Monetary Fund – whose managing director Christine Lagarde vehemently opposed Brexit – yesterday admitted the fall-out from the referendum was not as bad as expected, saying growth in the UK has ‘surprised on the upside’.

And analysts said the Bank of England’s decision to slash interest rates in half last month – to a new low of 0.25 per cent – may have been premature.

The latest Brexit boost came as Theresa May vowed to enhance the UK’s reputation as ‘one of the great trading nations’. The Prime Minister toured Jaguar Land Rover’s West Midlands headquarters with Chancellor Philip Hammond yesterday to underline the Government’s message that Britain remains ‘open for business’.

Another report, published today by pollsters YouGov and the Centre for Economics and Business Research, shows business confidence rebounded last month following a drop in July.

Markit said its index of activity in British factories – where scores below 50 show contraction and scores above 50 show growth – fell to a 41-month low of 48.3 in July as the shock of the Brexit vote knocked confidence.

But the index jumped to a healthy 53.3 in August, its highest reading for ten months and above rivals including France and Italy.

The five point increase in the index matched the previous record set in April 2009, the month after the Bank of England slashed interest rates to 0.5 per cent and the drawn out recovery from the last recession began.

Meanwhile, exports rose at the fastest pace for 26 months in August, which analysts said was driven by the dramatic fall in the value of the pound since the referendum.

Sterling, which has dropped more than 10 per cent against the US dollar and 9 per cent against the euro since the Brexit vote in June, was up around 1 per cent yesterday.

However, the fall in the pound had proved a double- edged sword, because prices paid by manufacturers for raw materials and components rose at the fastest rate for five years.

David Noble, group chief executive at the Chartered Institute of Procurement and Supply, which compiled the report with Markit, said the rebound in activity last month showed ‘ the Brexit brakes are off’.

Stephen Cooper, head of manufacturing at KPMG in the UK, said:

‘The results are spectacular for UK manufacturing. The fall in the value of sterling has had a marked impact on export orders.’

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: ‘The sharp improvement in sentiment does cast some doubt over whether the Bank of England needed to cut interest rates at the beginning of August, though no doubt the central bank would claim its stimulus package is partly responsible for the rebound in confidence.’

MORE evidence yesterday that all the nightmarish predictions of a financial meltdown post- Brexit were wild exaggerations. Indeed, for a country supposedly facing Armageddon, Britain seems to be remarkably resilient. Manufacturers, buoyed by booming demand for British exports from the US, Asia and Europe on the back of a ten per cent fall in the value of Sterling, reported one of their best months in 25 years.

The head of manufacturing at financial services giant KPMG described the results as ‘spectacular’.

Meanwhile, it was announced that the number of workless households has fallen by 865,000 since 2010 to a record low – a great tribute to Iain Duncan Smith’s welfare reform crusade.

And Nationwide reported a 5.6 per cent rise in house prices, showing the predicted instant collapse of the market hasn’t happened.

So the Mail has this question. Could it be that Bank of England governor Mark Carney’s cut in interest rates – causing misery for savers and pension funds – and his latest round of quantitative easing (otherwise known as printing money) were just a little premature?