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Brexit consequences for UK economy: Economists see prolonged impact
22/02/2017
Brexit consequences for UK economy: Economists see prolonged impact

Economists are looking ahead and predict prolonged Brexit consequences for UK economy. Will Britain allow EU nationals to stay back? Do you think will Britain leave EU on the best possible terms?

22 February, AtoZForex – The UK economy is looming with uncertainty following the departure from EU. The insecurity of job losses and lower investments swirls around unless the Government ensures a transitional arrangement after Brexit.  It can also shrink output, jobs, and wealth to some degree.

Brexit consequences for UK economy

Looking at the Brexit consequences for UK economy, IoD had told its members to be prepared for a worst-case scenario.  Under World Trade Organization rules, no agreement is reached and businesses face a sharply rising tariff.  An economist at Oxford Economics, Andrew Goodwin said:

“Trade, openness, and migration are the big issues.  We would expect the sort of deal the UK is going for to result in some degree of trade destruction.  And if we are talking about reducing the level of migration, that’s likely to result in growth prospects being weaker.”

It begins a process that could tear families apart.  Moreover, it may see the departure of vital industries from towns and possibly leave Britain’s poorer parts poorer still.

Will UK allow EU citizens to stay back?

The IoD stated that around 40% of its members hire EU citizens.  However, because of strict immigration controls, the companies are facing a skills shortage and this is likely to get worse.  There is a demand to allow 3 million EU nationals living in Britain to stay after Brexit by the business group.  This has been left in doubt after MPs rejected an amendment unilaterally supporting this right in the Commons.

What the UK pays off after Brexit?

The country is losing friction-free access to the world’s largest open market. In addition, it is giving up the free flow of its good across European borders. Also, it will forfeit ready access to the inflows of foreign direct investment.

As a consequence, London’s status might be blown up as a key player in global finance.  A potential threat to its future is swirling around looking at its contribution to the economic tax revenue. The Governor of BoE said on Tuesday that various Brexit scenarios will help determine how fast and when interest rates rise.

Will Britain leave EU on the best possible terms?

The business group suggested the Government provide a smooth and orderly transition. Also, they asked an assurance in the next Parliament to ultimately rule out a second referendum on EU membership. Stephen Martin, IoD director general, said:

“British businesses want to make Brexit work and are keen to explore trade opportunities with the rest of the world that arise once we leave the EU. But the first priority must be ensuring the exit process is as smooth as possible. That means avoiding a vacuum between the withdrawal agreement being settled and a new trade deal with the EU coming into effect.”

The European Commission President, Jean-Claude Juncker, has warned that the UK can expect a very hefty bill as the price of leaving the EU.  Furthermore, speaking to the Belgian parliament on Tuesday, he stated that Britain would need years to confer a free-trade deal with the EU.  Then, Juncker added that the initial two-year period is mainly taken up with agreeing on the technicalities of leaving. According to a former foreign office civil servant, Lord Kerr, Britain expects to leave the EU, but on the best possible terms.

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