Chief economist update: The fear of Brexit

"Pompa mortis magis terret quam mors ipsa."

Translated into the quotee Francis Bacon's - English philosopher, statesman and essayist - mother tongue, "The pomp of death alarms us more than death itself."

Yes Virginia, you know where I'm going with this. Brexit - the "no-deal" variety - is all but assured. UK Prime Minister Boris Johnson's announcement suspending Parliament from September 11th to October 14th - when the Queen of England agreed to make a speech, effectively starting a new session of Parliament - leaves very little time for "oppositions" to gather enough hands for a vote of no confidence versus Johnson, reverse Brexit, and/or delay the prime minister's hard deadline of a final divorce by 31 October 2019.

"Groans and convulsions, and a discoloured face, and friends weeping, and blacks, and obsequies, and the like, shew death terrible." (Bacon - Francis, not Kevin)

Woe to the UK. As 'The Economist' magazine prints,

"The impact on the British economy, which is already teetering near recession, could indeed be severe. The government's leaked "Operation Yellowhammer" analysis talks of possible shortages of fresh food, medicine and petrol, disruption to ports and the risk of civil unrest, especially in Northern Ireland, where trade across the border could be severely hampered. Manufacturers fret about the effect on just-in-time supply chains of tariffs and non-tariff barriers. Farmers and fishers are worried about duties on sheep, beef and fish exports. Service businesses and the NHS talk of recruitment problems."

But like the Y2K bug heading into the year 2000 - when fears over transportation, power and water plants, bank deposit, loan and credit calculations, government records, hospital and medical records and services and so on and so forth, an event horizon if you will - most, if not all, of these scares thought of when Britain leaves the European Union could turn out just that, scares.

Just like the Y2K bug, all involved are or have already made contingency plans for this event - a no-deal Brexit.

Kudos to 'The Economist' for writing about the other side,

"Brexiteers dismiss this is another "Project Fear", like the prophesies of doom before the June 2016 referendum which turned out to be too gloomy. They concede that there could be bumps in the road. But they also claim that no-deal would end uncertainty for businesses, be harmoniously managed by all sides and lead quickly to a new free-trade deal with the EU."

It's just the uncertainty - or in Bacon's words "the fear of death" - that makes Brexit fearsome.

Sure, UK GDP has contracted by 0.2% in the June 2019 quarter, but so has Germany (-0.1%) - the EU's biggest economy - and Italy's - the third biggest economy -- has stalled. The Eurozone's GDP growth, itself, has decelerated from 0.4% in the first quarter to 0.2% in the third quarter. US GDP growth slowed to an annualised rate of 2.1% from 3.1% -- but it's the UK economy that's still responding to the dictates of Economics 101.

The UK's low unemployment rate - 3.9% in June - is lifting wages. Average weekly earnings (excluding bonuses) grew by 3.9% in the year to June. This is the fastest annual rate of growth since June 2008 and the third straight month of wages growth acceleration.

Shouldn't Brexit encourage UK companies to shed workers, least of all give pay hikes? Shouldn't UK workers be discouraged from asking for pay increases faced with the uncertainty of losing their jobs?

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