The initial evidence suggests that the UK’s vote to leave the EU has caused its economy to slow sharply. That has already prompted the Bank of England to ease policy, and we suspect it will cut rates again in the coming months. However, activity elsewhere, including the euro-zone, appears to have been little affected. Indeed, the focus has quickly moved on to prospects for the US economy, where the latest evidence has been mixed. The Q2 GDP figures painted a gloomy picture and will probably cause the Fed to postpone its next rate hike until December. But the labour market remains healthy and economic growth looks set to pick up in the second half of the year. In China, meanwhile, the activity and survey data have improved recently and we expect the policy stimulus already in place to boost growth further over the rest of the year.
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