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In the News

UK Economy Defies Brexit Predictions

Graham Watson

6th January 2017

The FT returns to work, with Martin Sandbu and Chris Giles looking at the post-Brexit economy, pointing out that the strong performance of the economy since the Brexit vote has confounded optimists and pessimists alike.

What has caused this? Put simply, consumer spending, with consumer credit growth growing by the highest level since 2005. There's some interesting economics here - are consumers being uber-rational, and buying now rather than in more inflationary times in 2017 (that used to be what people thought would happen prior to the 1970s)?

I quibble with a bit of Martin Sandbu's belief that consumers thinking that the future will resemble the past, and that real wage growth will continue, as it has in the last couple of years, is 'rational': I think it's a lovely example of the availability heuristic and far from rational.

Consumers might have ''rationalised' things that way, but that doesn't make it 'rational'.

UK Economy Defies Brexit Predictions

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.

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