CHAOS was predicted. Following Britain’s vote to leave the European Union (EU) in June 2016, most economists believed that a recession was imminent. A government study published in the run-up to the referendum forecast that house prices would fall quickly, by up to a fifth, and that unemployment would rise by over 800,000. But there has been no recession. It is true that Britain has slipped down the international league tables of GDP growth since the Brexit vote, but growth in both 2016 and 2017 still averaged around 2%, roughly similar to 2015. Furthermore, house prices are steady and unemployment has dropped to a 42-year low of 4.3%. Disaster has been avoided. What went right?

The concept underlying the blood-curdling predictions before the referendum was “uncertainty”. No one has the foggiest idea about what Britain’s post-Brexit trading relationship with the EU will look like. Economists worried that heightened uncertainty would prompt households to rein in their spending and businesses to put investment plans on hold. With the benefit of hindsight this looks naive. Leave voters got what they wanted, so why should they cut back on spending? And for Remainers, Brexit remains some way off: the country’s status within the customs union in 2020 is a distant worry for the average Briton. Meanwhile, Britain remains an attractive place for foreign investors, in part because of its trusted legal system and low rate of corporation tax.

The global economy has also helped. The Brexit vote coincided with the beginning of the first worldwide economic upswing in years. Global trade volumes have grown decently, despite Donald Trump’s scary rhetoric. Firms from Seattle to Shanghai have recovered some of their animal spirits and are willing to invest once again. Britain, an economy highly dependent on international trade, has been swept along with everyone else. And the country’s exporters have been given an extra boost by the depreciation of sterling, which is almost 10% below its pre-vote level. In the past year real-terms exports have risen by a tenth, though the British trade deficit remains in line with its post-financial-crisis average.

The question is whether this unexpectedly good performance can continue. As Britain’s departure from the EU in March 2019 nears, businesses may start to get more jittery, especially if they fear that a deal with the EU will not be reached. If investment spending is cut, then consumers will eventually start to feel the pinch. And Brexit itself, which is likely to leave Britain with severely reduced access to its largest export market, will have profoundly negative long-term economic consequences. For now, however, the British economy continues to sail blissfully into the unknown.