Ten years after the referendum, could Brexiters have been right all along about leaving the EU? Business activity accelerated in August, while France contracted and Germany managed only modest growth. For advocates of leaving the bloc, the figures may offer a sense of vindication. Is Britain finally starting to reap the rewards of Brexit?

Britain’s flash composite purchasing managers’ index (PMI), a closely watched measure of private-sector activity, rose from 52.2 in July to 52.5 in August, its highest level for four months. Any figure above 50 indicates growth. S&P Global reckons the reading is consistent with GDP expanding by around 0.3% in the third quarter.

That’s hardly an economic boom, but in today’s Europe, even modest growth can place the country in front of the pack.

Britain’s reading exceeded the eurozone’s 52.1, Germany’s 51.0 and France’s 48.8. The French Service PMI has now contracted for eight consecutive months according to the survey, while German growth remains fragile. Britain, by contrast, expanded for a second month and at a slightly faster pace than in July.

Services – which make up roughly four-fifths of the economy – provided most of the momentum in Britain. The sector’s activity index rose to a six-month high of 52.8, supported by stronger consumer and business spending, improving domestic confidence and increased technology investment. Sunny weather also helped, an advantage the British economy cannot always count on.

There was other good news in the report: new business increased at its fastest pace since February. Companies became more optimistic for a third consecutive month, taking confidence to its highest level since the Middle East conflict began. The pace of job losses also slowed.

“The UK economy picked up a bit more pace in August, adding to signs that we should see solid economic growth of around 0.3% in the third quarter,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

The comparison with continental Europe is not entirely flattering, however. Eurozone manufacturing output grew at its fastest rate in four and a half years, whereas British factory growth weakened. Manufacturing headline PMI slipped from 51.9 to 51.5, while production growth fell to a five-month low. Some of the sector’s earlier expansion had been driven by precautionary stock-building amid the conflict in the Middle East. As fears of disruption eased, that temporary boost faded.

Britain is winning the August contest mainly because its services sector is performing well, not because the entire economy is firing at once.

A Brexit victory?

For those who predicted that leaving the EU would unleash a more agile and independent economy, the latest figures provide useful ammunition. Britain is growing more quickly than France and Germany, remains a magnet for technology and financial investment and has avoided the industrial stagnation affecting much of the continent. Predictions of immediate economic collapse after the 2016 referendum were plainly exaggerated.

But the PMI alone cannot settle the Brexit argument. It only shows whether activity is increasing or decreasing compared with the previous month, and does not reveal how large the economy might have been had Britain remained in the EU. Britain can grow faster than its neighbors for a few months while still being poorer than it would otherwise have been.

Since Britain formally left the EU in January 2020 and departed the single market and customs union at the end of that year, exporters have faced new customs declarations, regulatory checks and border delays when selling into their largest overseas market. Large companies can usually absorb these costs, but small exporters often struggle.

Services have performed better than goods, partly because a consulting report or software subscription does not have to wait at Dover. Even so, financial firms have shifted some staff and assets to Paris, Frankfurt, Dublin and Amsterdam to retain access to EU clients.

The Office for Budget Responsibility continues to estimate that Brexit will eventually reduce Britain’s trade intensity by 15% and leave long-term productivity 4% lower than it would have been inside the EU. These estimates rely on a hypothetical alternative history and should not be treated as precise measurements. Yet Britain’s disappointing record on investment, productivity and goods exports suggests that the broader diagnosis is difficult to dismiss.

The country’s recent growth has also been much less impressive once population increases are taken into account. According to the OBR, output per person remains broadly where it was in 2019. It expects overall GDP to grow by just 1.1% in 2026, before improving in later years.

The most unconformable part of Britain’s PMI report concerns the labour market. Private-sector employment fell again in August. Service companies have now reduced staffing for 23 consecutive months, the longest sequence since the survey began in 1996.

So, is Britain winning its Brexit bet? Against France and Germany in August, yes. Against the economic path Britain might have followed inside the EU, the evidence remains far less favorable.

Nevertheless, Britain has proved more adaptable than its harshest critics expected, especially in services and technology.