Thread by @KellerZoe

Britain’s economic resurgence has caught the world by surprise.
The numbers all point to blistering growth as the hit from Brexit continues to diminish each month.
— AEP

telegraph.co.uk/business/2021/…

The UK will probably regain pre-Covid levels of GDP before the eurozone, perhaps by Christmas. By the end of 2022 it may even have recouped the entire cross-Channel gap in growth since the referendum.

Philip Shaw from Investec has pencilled in blistering growth of 7.3% this year, but says it could be over 8%. “We’re trying not to sound outrageous but that is what the numbers are telling us,” he said. The firm has the eurozone pegged at 4.4%. Upgrades are pouring in.

The Swiss bank UBS has raised its UK forecast from 3.8% to 5.5%. Bank of America and Barclays have both raised theirs to 5.9%

A very optimistic Goldman Sachs is eyeing 7.1, thanks to early and rapid vaccination. It says press alarmism about a 1.3 m exodus of EU nationals from London is nonsense. It predicts many will return soon because jobs are scarce at home. Migrants from Hong Kong will do the rest.

“Everybody has been too bearish on the UK,” said David Owen from Jefferies. “It is going to be a ‘coiled spring’ recovery and we even think the UK will outperform the US in 2022 with 7.6% growth.” Mr Owen says a powerful inventory cycle is about to kick in as firms restock.

It will be further juiced by investment tax incentives on plant machinery. Early evidence from the torrid pace of new business formation suggests that the UK is a step ahead of Europe in exploiting smart data technology, and will be a leader of post-Covid innovation.

EU will rebound too. There is €500bn in pent-up household savings waiting to be spent. But vaccination paralysis in Dec and Jan is inflicting its long-tail damage today. April has turned into a lockdown wipe-out. Virologists in Ger, It and Fr say they cant reopen fully in May.

The erratic treatment of the AZ jab probably delays final reopening by yet another month. The EU is now trapped by its zero-tolerance policy on rare blood clots, when 3,000 Europeans a day are dying from Covid, many from blood clots caused by the disease itself.

It has poisoned the well for J&J viral vector jab as well.  Capital Economics says the 55m doses of J&J scheduled for the second quarter amount to 25% of the EU capacity to immunise (given the one shot effect).

The promise of 50% adult herd immunity by July is slipping away, and so is the second summer season for Club Med, with all that this means for pent-up insolvencies and sovereign debt ratios already stretched to the limit.

France has nudged down its growth forecast for this year from 6% to 5%. It is still too high. Spain has signalled a coming downgrade as well. The moment when eurozone output surpasses pre-Covid levels has probably been pushed into mid-2022.

UK data this week confirms that the collapse in trade with the EU seen in January was meaningless. The February figures are unrecognisable. They do not yet offer a “steady state” picture of post-Brexit trade as teething problems fade, but they do refute catastrophist claims.

Exports to the EU were down 12% but over 2/3 of this was offset by a rise in exports to the rest of the world. There was a 20% fall in exports to France but a 38% rise in shipments to Belgium, some shipped from the Humber to Antwerp rather than clogging up the route to Dover.

It is evidence of trade diversion away from French ports that can no longer be entirely trusted, the cost of Macron’s anglophobe antics. It implies a revenue loss for Calais.

On the import side, the UK is buying less from the EU and relatively more from elsewhere. China’s shipments jumped 71% (partly due to PPE). Imports fell 27% from France, 18% from Holland, 14% from Germany, and 13% from Italy.

A pattern is emerging: the EU has chosen to make goods trade with the UK needlessly complicated and is now losing market share to global competitors. There are signs that UK exporters are adapting to Brexit red tape, while EU exporters are more dispersed and less focused.

This will get worse when the UK waives the current exemptions on customs controls and reciprocates EU curbs. Europe is likely to see a galloping loss of its once captive UK market. Korea, Japan, China, America, and Mexico will snatch it away.

The UK’s fishing industry has suffered, but the commercial sums are tiny. Live shellfish exports are worth just £15m a year. There are eager buyers of British fish in the vast Asian market, once the logistics are right, says Barrie Deas, head of the Federation of Fishermen’s org.

Nor is it beyond the wit of man to put more catch on British tables. “We’re being inundated with emails from people asking where they can buy fresh fish but the big supermarkets don’t give it prominence the way they do in Spain and France. We’re missing a trick” he said.

It will take a generation to reach an economic verdict on Brexit. What is clear already is that the incessant high-decibel negativism of the London opinion machine has been exposed as ill-informed and hysterical. The UK economy is fine. Time to change the stuck record, my friends