ECONOMIC IMPACT OF BREXIT,WAS IT A VOTE IN FAVOR OF RECESSION,OR OF FINANCIAL FREEDOM? WHAT FINANCIAL SERVICE AFTER BREXIT FOR EUROPEAN COUNTRIES? HOW BREXIT COULD CHANGE BUSINESS IN UNITED KINGDOM?
Remain campaign,U.K. Prime Minister David Cameron, London Mayor Sadiq Khan unite to promote EU membership.The two politicians’ joint effort shows the referendum is cutting across traditional party allegiances.The two men unveiled a five-point pledge card promising that a Remain vote would guarantee full access to the EU’s single market; workers’ rights protection; the retention of the European arrest warrant; a special status for the UK in Europe; and economic stability.
Brexit group Vote Leave has been designated the official Leave campaign for the upcoming EU referendum.The Electoral Commission has today ruled the group, which has the support of London Mayor Boris Johnson, former Tory leader Iain Duncan Smith and four Cabinet Ministers including Michael Gove, will be the lead group .The decision means the rival Grassroots Out group, which was backed by businessman Arron Banks, Ukip leader Nigel Farage and Tory backbenchers Peter Bone and Tom Pursglove, have missed out.
Brexit: People voted to leave EU because they feared immigration, major survey finds.One of the key strands of the Remain campaign was the so-called ‘Project Fear’, the Remainers’ attempt to encourage people to stay by highlighting the negative effects that Brexit would have on jobs, the economy and national security.The extent to which Project Fear influenced the public’s voting decision will never be known, but it is clear that Leave voters believe fear was the main motivation for Remain voters. As many as 43% of Leave voters believe that Remain voters wanted to stay in the EU because of a fear of change and uncertainty a far greater number than any other factor.Before the referendum During the campaign ahead of Britain’s general election in June, voters focused on issues like care for the elderly and national health services. The previous year’s Brexit vote was largely sidestepped.But companies are reassessing their long-term investments in Britain, fearful of how Brexit might affect trade across the European Union. And while Britain and Europe are negotiating over what happens to European Union citizens who now work in Britain (as well as Britons who work in other European Union countries), no one is sure how those talks will g , many economists produced gloomy forecasts which have since been proved wrong. Consumers' confidence has not suffered, and by and large, things have gone on as before.Supporters of withdrawal argued that ending net contributions to the EU would allow for tax cuts or government spending increases. The Institute for Fiscal Studies noted that the majority of forecasts of the impact of Brexit on the UK economy indicated that the government would have less money to spend even if it no longer had to pay into the EU.Most economists, including the UK Treasury, argue that being in the EU has a strong positive effect on trade and as a result the UK's trade would be worse off if it left the EU.Surveys of leading economists show overwhelming agreement that Brexit will likely reduce the UK's real per-capita income level. A 2017 survey of existing academic literature found "the research literature displays a broad consensus that in the long run Brexit will make the United Kingdom poorer because it will create new barriers to trade, foreign direct investment, and immigration. However, there is substantial uncertainty over how large the effect will be, with plausible estimates of the cost ranging between 1 and 10 percent of the UK’s income per capita.
Britain’s exit from the European Union shocked global markets.No one really knows what happens now. The collective imagination leads to dark places.The world map has been redrawn with the rules of commerce across Europe, the largest marketplace on earth. Britain’s vote on Thursday to leave the European Union has set in motion an unprecedented and unpredictable process that threatens turbulence and potential crisis for Britain, for Europe and for the global economy.
Was it a vote in favor of recession, or of financial freedom?The victory of the Leave campaign in a June 2016 referendum on the UK’s future in the bloc led to the resignation of Prime Minister David Cameron. Now led by Prime Minister Theresa May, the UK must negotiate a new relationship with the EU. With May triggering the Article 50 exit process in March 2017 and committing to leave the EU Single Market, the UK could face the loss of preferential access to its largest trading partner, the disruption of its large financial sector, a protracted period of political uncertainty, and the breakup of the UK itself. After May’s decision to call snap elections in June 2017 led to her Conservative Party losing seats, the stability of her government and its ability to negotiate with the EU was thrown into further doubt. Meanwhile, the Brexit process could accelerate nationalist movements from Scotland to Hungary, which would have unpredictable consequences for the EU.UK economic growth held steady at just over 2% in the year to Q3 2016, w ith no immediate marked deceleration after the ‘Brexit’ vote. The main reason for the projected s lowdown is an expected decline in business investment, particularly from overseas in areas like commercial property, due to uncertainty about the U K’s future trading relationships with t he EU and other key trading partners. • Consumer spending growth is projected to hold up better, but will s till slow from previous strong rates, dropping to just over 2% in 2017 in our main scenario. However,as great a drop as initially feared immediately after the referendum.The construction sector will suffer the most from lower investment levels and capital goods manufacturers will also be hit, but some manufacturing exporters should benefit from the weaker pound.
The UK Government negotiates its future relationship with the EU, it is unclear how Brexit will affect the fight against economic crimes , particularly the future of the European Arrest Warrant, Mutual Legal Assistance and asset forfeiture mechanisms, and the UK's relationship with Europol, to mention but a few. Domestically, it is also unclear whether Brexit will bring about changes to structural arrangements for fighting bribery and fraud, e.g. in the role of and relationship between the SFO, the NCA, and the recently created Anti-Corruption Coordination Centre.
Yet for some economists, things are different when it comes to the UK leaving the EU’s customs union and single market.UK growth to slow to 1.5% in 2017 and 1.4% in 2018. The UK would avoid recession in this scenario, although risks to growth are still weighted to the downside given the uncertainties associated with Brexit.A key factor behind the overall slowdown is a moderation in consumer spending growth to around 1.6% in 2017 and 1.1% in 2018. This reflects a squeeze on household spending power from higher inflation and sluggish wage growth.Wage growth continues to be low despite the lowest unemployment rate since 1975 and we expect only a modest increase in earnings growth to 2.5% on average in 2018, as compared to 2.7% average inflation in that year.Uncertainty surrounding Brexit is also holding back business investment in the UK, which would otherwise be expected to be picking up strongly as global growth has been robust and finance remains relatively cheap.Manufacturing growth has been reasonably strong in recent months on the back of a recovering global economy. Services growth has moderated but remains positive, but construction has been weaker. We expect these broad sectoral trends to continue into 2018.London has grown faster on average than other UK regions since 2010, but is relatively exposed to Brexit and we expect its growth rate to fall back to close to the UK average in 2017-18.After raising interest rates in November, the Bank of England will probably keep rates on hold over the coming months as it waits for more information on growth, inflation and the Brexit negotiations.Ireland could suffer most from Brexit – Northern Ireland more than other parts of the UK, the Irish Republic more than the rest of the European Union. The issues crystallise in the question of borders. In the North a clear 56% majority, including about a third of unionists, voted Remain, and very few people even among pro-Brexit voters want a 'hard' border between the North and South. But few believe British promises about a 'soft' electronic border. The Brexit imperative of 'stopping immigration' demands a hard border, as does an EU external frontier, and the real question is where? What does the economic future hold for Britain? Of course, the dust has not yet settled, as there are a lot of unknowns facing the first country to leave the European Union. There is no question that the decisions to be taken will involve re-defining Britain's trade relationship not only with the EU, but also with the rest of the world, for years to come. This article explores the economic uncertainties of Brexit and potential ways forward.
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