Brexit Watch: Is the economy succumbing to Brexit worries?

The disappointing tone of this week’s survey evidence and hard economic data has raised concern that the economy is now succumbing to Brexit fears. However, there were probably some non-Brexit related factors at play. And growth should still see some acceleration ahead. Coming on top of falls in the manufacturing, construction and service sector Markit/CIPS PMIs earlier in the week, the disappointing tone of the latest official data on industrial production and construction made a significant rebound in GDP growth in Q2 more difficult to achieve. Admittedly, the all-sector PMI still points to quarterly growth of around 0.5%. But on the basis of the hard data, even growth of 0.4% would require a monthly rebound in growth in June.