Barclays: Theresa May will make the UK recession worse if she delays Article 50

Prime minister Theresa May is gathering her cabinet at Chequers today, and she wants each member to present their plans and describe "opportunities" for Brexit - even from the ministers who favoured Remain.

It looks as if May is fast-tracking Brexit even though her government is heavily incentivised to delay it as long as possible. She even said Parliament will not get a definitive vote on triggering Article 50.

Two Barclays analysts, Fabrice Montagne and Andrzej Szczepaniak, noted recently that May has a good reason to get Brexit moving quickly: The longer she delays her Article 50 decision, the worse the recession in the UK will be, they told investors:

"Looking ahead, we expect the UK economy to contract from Q3 16 on an initial referendum shell-shock from the 'leave' outcome. In our view, this will be driven first and foremost by firms ... as they freeze spending, pull back on investment projects and put an end to hiring."

Barclays calls this our "do-it-yourself recession," because it is inflicted entirely by the EU referendum rather than any other single factor:

The pair note that "Already we have seen business confidence plummet to levels last seen during the financial crisis, with the CBI Business Optimism Index registering its sharpest decline since Q1 74, falling to -47 in Q3 16 from -5 in Q2 16."

As companies delay investment decisions due to the uncertainty around when Brexit will actually occur, it creates a growing pit of inertia that has its own knock-on effects, crippling the economy:

"This deterioration in firms' investment intentions post-referendum have been confirmed in surveys across the board. ... In our view, firms are likely to hold back until they have more clarity on the future of the UK's role in the EU and the rest of the world, with uncertainty only to be prolonged as Theresa May's government waits longer until triggering Article 50."

It puts May in a catch-22 - she knows Brexit will hurt the economy, but delaying Brexit hurts it too. The only thing she doesn't know is which will hurt the country more.