The final judgment on the long-term impact will be years in the making. But by January 2017 it will be clear whether the UK economy has been pushed into formal recession — defined as two consecutive quarters of negative growth — or whether it has successfully ridden out the shock.
Many people will not have to wait that long to have a strong idea. Here are the coming milestones that both investors and politicians will use to judge the trajectory of the economy:
Brexit: a vote that changes everything
A vote against the EU could also turn out to become a vote against the United Kingdom
As Thursday’s decision begins to reverberate around world markets, wild volatility is on the agenda. Sterling has already come under a pummelling, falling to a 30-year low. Gilts are also in the spotlight as investors take bets on whether the Bank of England is more likely to cut rates now that voters have decided to leave the EU.
Whether the market moves are sustained — or just a brief success — will be vital for the economic outlook.
One big factor is whether rating agencies change the UK’s sovereign debt rating. Any downgrade will make it more expensive for the government to finance its debt.
July 5: June services and composite Purchasing Managers Surveys
This is the first scheduled survey of post-vote business activity. The data collection period for the service sector survey closes on June 28, so it will capture a flavour of business sentiment after the decision to leave.
July 5 and 7: Gilt auctions
Two scheduled gilt auctions will indicate whether investors’ appetite for British debt remains intact.
July 12: Office for Budget Responsibility fiscal outlook
The independent public finance watchdog’s annual assessment of the outlook for the public finances has been on the calendar for months, but the question of Brexit’s impact on taxation and spending will dominate all other issues.
July 14: Rics housing market survey
Housing, particularly in London, is likely to be one of the most vulnerable sectors. The Royal Institution of Chartered Surveyors will only begin collecting data for its monthly snapshot on June 24, to ensure that the survey will give a clear picture of how the housing market is reacting.
July 14: Bank of England monetary policy decision
While the rate-setting committee may choose to meet sooner, this is the first meeting in the diary. Members will have to decide from the market signals whether any response — either cutting interest rates or buying more assets — is needed.
Mid-July: Business reaction clearer
From now on, survey data will cover only the period of time after the vote, revealing more about the business response to the decision to Leave. Reports are due from the CBI, Markit, which tracks business activity, and the recruitment industry.
July 27: Second-quarter GDP
The figures will show the economy’s performance until the end of June, indicating how robust — or frail — it was before the Brexit shock.
August 4: BoE inflation report
Officials will now have a lot of survey and market data. The BoE will present its updated forecasts for the UK economy for the year and its expectations for interest rates. If sterling has fallen, increasing import costs, inflation is set to be markedly higher. But if the BoE chooses to focus instead on stabilising the economy through loosening monetary policy, it will have to explain why. Market interest will be intense.
September — Official data flow intensifies
From September on, official data from July will be released. The impact on the labour market as well as individual sectors such as construction and manufacturing will become clear.
October 27 — third-quarter GDP
Has the UK contracted? Or has the economy powered on? This will be the key moment to assess the short-term impact of Brexit.
November — The Autumn Statement
Armed with a few months of both official and survey data, now is the time for big judgment calls from officials. The OBR will have to decide whether any disruption to the economy is temporary or whether fundamental changes to the outlook are needed.
Britain has decided to leave the EU. Were the experts right in predicting dire economic consequences from such a vote?
Leaving is embedded in normative economics. Positive economics will draw out the consequences. The timetable will be the litmus test.