Contrary to predictions, Britain’s economy post-Brexit has been shown to be thriving, with business activity hitting a 17-month high last month.
Britain’s economy grew by 2.2 per cent last year, which is more than six other leading nations including the US, Germany and Japan.
The findings, produced by analyst firm IHS Markit, indicate Brexit has had a positive impact on the economy, thereby embarrassing economists who predicted damning consequences of Britain’s departure from the crumbling bloc.
Andrew Haldane, chief economist at the Bank of England, admitted forecasts were wrong and that “the data has surprised to the upside.”
He said economists are now facing a “Michael Fish moment”, referring to Fish’s infamous assurance that there was “no hurricane” on the eve of the 1987 disaster.
Mr Haldane said: “It’s a fair cop to say that the profession is to some degree in crisis.”
In a dramatic u-turn, the Bank is now forecasting growth for the UK economy in 2017, predicting the economy will increase by 1.4 per cent.
A report published by the Centre for Business Research at Cambridge University has found that Treasury forecasts over Brexit to have been “flawed and partisan”.
According to the research, only one forecast – the fall of sterling – has come to pass.
Chief economist at IHSMarkit Chris Williamson said: “The UK economy ended 2016 on a high. Hiring has also revived alongside upturns in new orders and business confidence.”
He added that strong economic growth could lead to rising inflation and could force the Bank to raise its official rate from the record low of 0.25 per cent.
He said: “All of which adds weight to the argument that the next move by the Bank of England is as likely to be a rate hike as a cut.”