Cazenove's Jeffrey: Brexit downside risks worse than 1992 - but there could be an 'invigorating' economic shake-up

Positive impact from falling sterling

There is no doubt we have just experienced a very significant shock with Brexit. The risk is, however, that our greater feeling of vulnerability leads us to overstate the immediate negative consequences for the economy.

Looking at published UK GDP data for the 15-year period between 1993 and 2007, there were only three quarters in which the year-on-year growth rate was below 2%: in Q4 2004 and Q1 2005 at 1.9%, and then in Q4 2006 at 1.4%. We now know, of course, that the average growth rate of 3% over the period was unsustainable, if not reckless, and that the authorities should have paid more attention to the escalating debt levels and the deterioration in the trade accounts that accompanied this growth. Carney: Brexit could lead to a technical recession However, to the extent that the Bank of En...