The damage done by the United Kingdom and European Union membership referendum that took place on June 23, 2016, has been telling with almost every sector in the UK bearing the brunt of the Brexit vote.
IMF Managing Director, Christine Lagarde warned that the UK risks suffering immeasurable consequences from its Brexit decision, even though the actual dissolution of the once thriving marriage between the UK and the EU won’t be officially executed until 2019.
Lagarde added that: “The official implementation of the Brexit plan is guaranteed to lead to the further depreciation of the Pound Sterling, a strong increase in the country’s inflation, and a fall in wages as well as inbound investments.”
With those in authority adamant that there’s no going back on one of the most puzzling economic decisions ever made by a country, economists and financial experts have been sharing their opinions on what to expect in the next few months as the UK continues to draw closer to what some describe as “Judgement Day” for the country’s presently stagnating economy.
Some experts, however, believe that the uncertainty that precedes the final execution of the Brexit order is more damaging than the implementation of Brexit itself. For example, John Van Reenen, a director at the Centre for Economic Performance, London School of Economics, already sees a rapid slowdown in investment, which has negatively affected economic growth. He says: “Businesses simply do not want to take any risks and make new investments since the economic future can’t be guaranteed.”
Those who are a part of Britain’s vibrant export sector also have much to worry about as they remain unsure of what the future holds after ties with the region responsible for 48% of all UK exports are cut.
The insurance industry is another sector of the UK economy that is suffering from the economic instability brought about by the uncertainty over Brexit. The Pre-Brexit setup saw all UK based insurance firms have access to a single market that is comprised of 28 countries. These countries collectively make up about 500 million people who can be reached by insurance firms in the UK at very little costs to the firms.
This, however, won’t be the case once Brexit becomes official as insurance companies will have to open EU branches in order to be able to reach prospective clients located in the region.
Impact of Brexit on the British People and a Reason to Hope
On the overall quality of life that awaits UK residents after the implementation of the already triggered Article 50 of the Lisbon Treaty, an overwhelming number of economists seem to envisage only a gloomy future.
The New York Times’ Paul Krugman believes Britain’s finances will certainly be hurt by the implementation of Brexit as it is already being hurt by the uncertainties that loom. He says: “This will indeed make the British people poorer because the trade effects of severing ties with the EU will be massive.”
He, however, offers a glimmer of hope, stating that the crisis will certainly not be as profound as the financial implosion in 2008. Businesses still need to run as normal with the same protections they would have needed before the question of Brexit was brought up at all. It is clear that every sector of the UK’s economy has been negatively affected by the country’s withdrawal from the EU agreement. Whether this economic independence leads to a resurgence of the economy, it is left for all affected to see.