UK economy escapes Brexit blow, for now

LONDON: Britain's high streets are heaving with shoppers despite June´s shock vote to leave the European Union, big companies have reported few signs of distress and some tabloid newspapers are even talking about a post-Brexit economic boom.

The overwhelming view from economists is that it is too early to know how Britain will cope with years of Brexit uncertainty - but there is a growing belief the country can avoid a recession that only weeks ago was regarded as likely.

On the face of it, the early optimism contrasts with the pre-referendum warning from former Prime Minister David Cameron that a Brexit vote would put a "bomb under the economy". Retail sales in August reversed much of an immediate post-Brexit vote fall, with retailers reporting their strongest sales in six months, industry data showed on Thursday, partly due to a weaker pound attracting overseas buyers.

Official figures out last week showed the number of people claiming unemployment benefit fell unexpectedly in July. Before the June 23 referendum, the British finance ministry had warned a Brexit vote would mean homeowners facing higher borrowing costs, pushing the economy into a "DIY recession", and that equity prices were likely to fall.

However, nearly half of mortgage borrowers look set to gain from the Bank of England´s interest rate cut on Aug.4, while British equity markets have risen. Some British newspapers which supported the Leave campaign have hailed such news. "Remainers were WRONG!" the Daily Express declared earlier this month, adding: "Brexit Britain booms".

But most economists do not share this jubilance and caution these positive signals may have little bearing on the long-term outlook for the economy, which must contend with years of uncertainty as Britain extricates itself from the EU.