Chart of the week: Brexit has rebalanced the economy

Britain’s manufacturing still hasn’t recovered from the financial crisis, says David Smith in The Sunday Times. Output is still 3.3% below 2008’s first quarter; the service sector is already 14% up on its pre-crisis peak. So manufacturers are hoping for a handy fillip from sterling’s sharp post-referendum slide, which makes our goods cheaper abroad.

They are getting it. Export order books are at their healthiest since December 2013, according to the Confederation of British Industry. The strengthening world economy also bodes well. Still, not all manufacturers export, and the weak pound has also driven up raw material and fuel costs. These input costs are rising by 19% year-on-year.

Ultimately, that’s good news, says Philip Aldrick in The Times. It is forcing firms to invest, as they can no longer rely on cheap foreign labour. A Bank of England survey shows that they are already investing more. “Were Brexit not the catalyst, everyone would be crowing about a nascent productivity surge.” Brexit is a risk, but it is bringing about a long-overdue rebalancing from consumption to investment and manufacturing.

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