Why were the forecasts so wrong? Before the Brexit vote the Treasury published a report outlining the dire consequences of a leave vote. With cover and appendices it ran to 90 pages. It looked at two possible scenarios, a shock and a severe shock.

Its judgment was: “In both scenarios, a vote to leave the EU would result in a recession. Setting the shock scenario against the OBR’s Budget 2016 forecast, the analysis shows that immediately following a vote to leave the EU, the economy would be pushed into recession with four quarters of negative growth.”

The severe shock case was worse: not only four quarters of recession but also an economy that would have declined by 1.4 per cent by the end of this year.

These possibilities of recession, the Treasury reported, were supported by the Mark Carney, governor of the Bank of England and Christine Lagarde, managing director of the International Monetary Fund. They were not alone. In his introduction, George Osborne, the then chancellor, noted: “I am grateful to Professor Sir Charles Bean, one of our country's foremost economists and a former Deputy Governor of the Bank of England, who has reviewed this analysis and says that it ‘provides reasonable estimates of the likely size of the short-term impact of a vote to leave on the UK economy’.”

We do not have full figures yet for this year, but in the third quarter the economy is estimated to have grown by 0.4 per cent and it looks as though the final quarter will show similar growth. For what it is worth, both the Bank of England and the Office for Budget Responsibility now have a central estimate that growth next year will be 1.4 per cent.

Theresa May refuses to comment on suggestions Brexit deal will take 10 years

That Treasury report was right about two things, though. It projected a fall in the pound of 12 per cent under the shock scenario and 15 per cent under the severe shock one. Well, we have had a fall of around 15 per cent on the trade-weighted measure, so we are in severe shock territory. And it was right about a hit to government revenues, though for the wrong reason. It thought that recession would lead to an increase in government borrowing. There does seem to have been some rise in the government deficit – or more accurately it is not coming down as fast as expected. The trouble is that a shortfall in tax revenue was evident even before the Brexit vote for reasons that are not yet clear. We will learn more in the months ahead.

Apocalypse deferred or no apocalypse at all? The first point to make is that the official outlook for next year is for somewhat slower growth than projected ahead of the vote, for without Brexit growth might have been 2.3 per cent. So far there has been zero impact on growth, or as near zero as makes no difference. But some slowing is expected from now on. How serious? Well, let’s look at the reasons why the experts have so far been so wrong.

First, they underestimated the importance of momentum in an economy. Nearly 70 per cent of final demand comes from consumption and consumers don’t react to political events in the stark way economists expected. Remember more than half the voters got the decision they wanted, so why should they suddenly panic? If anything they should be cheering. In any case big political events are quite rare, so there was little for the economic modelers to go on.

Brexit Concerns Show all 26 1 /26 Brexit Concerns Brexit Concerns Brexit will put British patients at 'back of the queue' for new drugs Brexit will put British patients at the “back of the queue” for vital new drugs, the Government has been warned – forcing them to wait up to two years longer A medicines regulator has raised the alarm over a likely decision to pull out of the European Medicines Agency (EMA), as well as the EU itself. ealth Secretary Jeremy Hunt dropped the bombshell , when he said he expected the UK would quit the EMA – because it is subject to rulings by the European Court of Justice. Getty Images Brexit Concerns London to lose status as 'gateway to Europe' for banks One of Germany’s top banking regulators has warned that London could lose its status as “gateway to Europe” for the banking sector after Britain quits the European trading bloc. Andreas Dombret, who is an executive board member for the Bundesbank—Germany’s central bank—told a private meeting of German businesses and banks earlier this week in Frankfurt that even if banking rules were “equivalent” between the UK and the rest of the EU, that was still “miles away from [Britain having] access to the single market”, the BBC reports. Jason Hawkes Brexit Concerns Exodus The number of financial sector professionals in Britain and continental Europe looking for jobs in Ireland rocketed in the months after the UK voted to leave the European Union Shutterstock Brexit Concerns Brexit is making FTSE 100 executives richer Pay packages of many FTSE 100 chief executive officers are partly tied to how well share prices are doing rather than the CEO’s performance -- and some stocks are soaring. ritish equities got a boost since the June vote because the likes of Rio Tinto, Smiths Group and WPP generate most sales abroad and earn a fortune when they convert these revenues back into the weakened pound. Sterling’s fall also made UK stocks more affordable for overseas investors. Rex Brexit Concerns Theresa May: UK to leave single market Theresa May has said the UK "cannot possibly" remain within the European single market, as staying in it would mean "not leaving the EU at all". Getty Brexit Concerns Lead campaigner Gina Miller and her team outside the High Court Getty Brexit Concerns Raymond McCord holds up his newly issued Irish passport alongside his British passport outside the High Court in Belfast following a judges dismissal of the UK's first legal challenges to Brexit PA wire Brexit Concerns SDLP leader Colum Eastwood leaving the High Court in Belfast following a judges dismissal of the UK's first legal challenges to Brexit PA wire Brexit Concerns Migrants with luggage walk past a graffiti on a wall as they leave the 'Jungle' migrant camp, as part of a major three-day operation planned to clear the camp in Calais Getty Brexit Concerns Migrants leave messages on their tents in the Jungle migrant camp Getty Brexit Concerns The Adventist Development and Relief Agency (Adra) which distributes approximately 700 meals daily in the northern Paris camp states that it is noticing a spike in new migrant arrivals this week, potentially linked the the Calais 'jungle' camp closure - with around 1000 meals distributed today EPA Brexit Concerns Migrant workers pick apples at Stocks Farm in Suckley, Britain Reuters Brexit Concerns Many farmers across the country are voicing concerns that Brexit could be a dangerous step into the unknown for the farming industry Getty Brexit Concerns Bank of England governor Mark Carney who said the long-term outlook for the UK economy is positive, but growth was slowing in the wake of the Brexit vote PA Brexit Concerns The Dow Jones industrial average closed down over 600 points on the news with markets around the globe pluninging Getty Brexit Concerns Immigration officers deal with each member of the public seeking entry into the United Kingdom but on average, 10 a day are refused entry at this London airport and between 2008 and 2009, 33,100 people were detained at the airport for mainly passport irregularities Getty Brexit Concerns A number of global investment giants have threatened to move their European operations out of London if Brexit proves to have a negative impact on their businesses Getty Brexit Concerns Following the possibility of a Brexit the UK would be released from its renewable energy targets under the EU Renewable Energy Directive and from EU state aid restrictions, potentially giving the government more freedom both in the design and phasing out of renewable energy support regimes Getty Brexit Concerns A woman looking at a chart showing the drop in the pound (Sterling) against the US Dollar in London after Britain voted to leave the EU Getty Brexit Concerns Young protesters outside the Houses of Parliament in Westminster, to protest against the United Kingdom's decision to leave the EU following the referendum Getty Brexit Concerns Applications from Northern Ireland citizens for Irish Passports has soared to a record high after the UK Voted in favour of Leaving the EU Getty Brexit Concerns NFU Vice President Minette Batters with Secretary of State, Andrea Leadsome at the National Farmers Union (NFU) took machinery, produce, farmers and staff to Westminster to encourage Members of Parliament to back British farming, post Brexit Getty Brexit Concerns The latest reports released by the UK Cabinet Office warn that expats would lose a range of specific rights to live, to work and to access pensions, healthcare and public services. The same reports added that UK citizens abroad would not be able to assume that these rights will be guaranteed in the future Getty Brexit Concerns A British resident living in Spain asks questions during an informative Brexit talk by the "Brexpats in Spain" group, about Spanish legal issues to become Spanish citizens, at the town hall in Benalmadena, Spain Reuters Brexit Concerns The collapse of Great Britain appears to have been greatly exaggerated given the late summer crowds visiting city museums, hotels, and other important tourist attractions Getty Brexit Concerns The U.K. should maintain European Union regulations covering everything from working hours to chemicals until after the government sets out its plans for Brexit, said British manufacturers anxious to avoid a policy vacuum and safeguard access to their biggest export market Getty

Second, they underestimated the impact of the fall in sterling. You don’t need many British people to decide to spend their holidays at home, or many more foreigners to spend money here, to tip the travel and tourist industry into a boom.

Third, the cut in rates and the additional money pumped into the system by the Bank of England must have had some effect. Though that decision back in August now looks premature, it can’t have done damage to demand and may have helped a bit. The housing market has continued to remain strong at the middle and bottom ends, though at the very top there has been a fall-off. Mind you, that fall-off probably has more to do with the surge in stamp duty charges than any inherent weakness in demand.

Fourth, the boom in shares must have had some impact on steadying confidence. True, the link between share prices and consumer confidence is a fuzzy one, and true, if you allow for the fall in sterling the rise has been less marked. But the fact than most people with a portfolio of financial assets have ended the year 20 per cent richer than they were at the beginning must have helped support the economy a bit.

Finally, after the initial shock, the fact that the “experts” had been so wrong emboldened the business community. The immediate impact was indeed a huge decline in the purchasing managers’ indices, which track business confidence and have in the past given a very good indication of future economic growth. But two months on, the PMIs bounced back and started again to signal solid growth ahead.

Now let’s look ahead. There is no evidence yet of a serious slowdown in growth but some evidence of a slight one. The PMIs are signaling a good first half of the year, particularly for the all-important services sector that makes up nearly 80 per cent of the economy. Exports seem to have perked up a bit too. But we have yet to see the impact of the fall in the pound move through the supply chain, so people are still enjoying a real increase in their living standards. A lot depends on prices in the coming months. If inflation goes above about 2.5 per cent real pay would be stagnant. In addition, employers are squeezed not only by higher import costs but also by the rise in pay, thanks in part to the living wage. As yet there has been no rise in unemployment but the top has come off the job market boom.

So it is possible that in another six months not only will real pay be pretty stagnant but unemployment will be creeping up. This would certainly take the edge of consumption. There is a further possibility that the housing market will top out, thanks to higher global interest rates. It would be plausible for at least one increase in UK rates to come this year.

There is one further possibility that might damage confidence. It is that the Brexit negotiations will get nasty. That will not have much impact on consumers. Indeed they may try to switch to buying British goods rather than European ones, which would support the domestic economy. But it would be naïve not to accept that rough negotiations will hit business confidence.