Bank of England finds corporate calm before the Brexit storm

Jake Cordell
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Gherkin pictured in front of Canary Wharf
The sun is shining on the UK economy, but for how long? (Source: Getty)

The UK economy is ticking over in the wake of the EU referendum, although signs of a slowdown, a rise in inflation and pressure on jobs and wages are beginning to show, a survey for the Bank of England has shown.

The Bank's agents summary of business conditions, which is compiled from Threadneedle Street's sprawling network of officials across the country, concluded "growth had slowed overall as uncertainty rose following the EU referendum, although it remained positive."

The summary also confirmed consumers had remained "resilient" in the face of the shock vote, although the robustness of businesses was less secure.

Read more: Labour's Brexit-backing manufacturer wants the pound to reach parity with the dollar

"Investment and employment intentions had fallen, and were consistent with broadly flat levels of capital spending and employment over the coming six to 12 months."

However, it was noted that some businesses "were hopeful that demand in certain areas of work would rebound, as firms started to take major business decisions in light of the EU referendum vote."

The Bank also looked specifically at the impact the weaker pound was having on businesses and consumers. Contrary to other surveys, they found that although manufacturers were optimistic about a rise in exports, this bounce had not yet materialised.

Similarly, retailers had proved slightly reluctant to raise prices in the face of higher costs of imports, "but there were signs that would begin over the coming months, with the extent of the depreciation helping persuade some retailers of the need for higher prices."

Sterling's fall had also helped boost tourism numbers and convinced more Brits to stay at home, boosting spending in the UK over the summer and helping to cushion the effects of the immediate fallout.

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