No Government, No Worries. the Economy Will Be Just Fine

The impact of most political events on the economy is massively over-rated.

by Matthew Lynn

Uncertainty will hit investment. Markets will lose direction. Companies will put plans for new factories and warehouse on hold, and shoppers will stay away from the shops as they worry about the future too much to spend any money.

The clichés roll effortlessly from the tongues of equity strategists and academic pundits every time there is a political crisis of one sort or another that might have some impact on the economy.

There is a problem, however, and it is a fairly major one. When you look closely, it doesn’t appear to be true. Spain has had no government for eight months, and may never have one again, but its economy is roaring ahead. We are locked in Brexit confusion, but so far there is no discernable impact on the economy. Ireland, Belgium and even the US have all done fine when no one was in charge.

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