Brexit vote was a surprise, but ... - BTMU

Analysts at Bank of Tokyo Mitsubishi explained that the Brexit vote result came as a surprise even to those who wanted to leave the EU.

Key Quotes:

"It prompted an initial sharp spike higher in uncertainty which contributed to the plunge in measures of business and consumer confidence in the UK. The widely followed composite PMI survey fell to recessionary levels in July. However, weakness evident in the surveys has not yet been replicated by the incoming hard economic data. Retail sales rebounded more solidly than expected in July following weakness in June driven by strong discretionary spending."

"The hard hit to consumer confidence has not yet prompted households to materially hold back from spending. It is reassuring that spending did not weaken close to the peak of uncertainty in the initial aftermath of the Brexit vote. Measures of confidence could now begin to gradually recover if the initial Brexit vote fears prove to be an over-reaction."