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Brexit: British Finances Expected to Weaken after EU Departure and Johnson Faces Pressure to Step into the Limelight

London Brexit

Brexit: British Finances Expected to Weaken after EU Departure and Johnson Faces Pressure to Step into the Limelight

According to a report by The UK in a Changing Europe, an independent thinktank subsidized by the ESRC (Economic and Social Research Council) and based at KCL (King’s College London), the consequences of any type of Brexit could be disastrous for the growth of the UK’s economy.  

The thinktank conducts studies and research into key areas concerning the British economy and infrastructure once the Brexit process has been completed. Some of those key issues include:

  • The future relationship between the UK and the EU: the impact that EU policies have on ‘the single market, financial regulation, trade, investment, growth and the free movement of people.’
  • Attitudes towards the EU: social and political attitudes, the nature of euroscepticism, generational differences, the media’s role.’
  • A Changing UK in a Changing EU: differences in public opinion in England, Northern Ireland, Scotland and Wales; implications of constitutional changes in the UK and implications of British exit for different parts of the UK.’

Taken from the website.

Nearly all possible versions of Brexit could cripple the UK’s financial markets, thus putting a cap on any prospects of improving crucial aspects including poverty, and social care. Research from the UK in a Changing Europe suggests that the best way forward is for Westminster’s politicians to bring about a resolution to the Brexit deadlock and concentrate efforts towards tackling important issues such as transforming the democratic process and mechanics of Britain’s political system to become more effective.  

The thinktank’s latest research entitled The Brexit Scorecard evaluated the current and future performance of the economy and public finances, fairness, openness and control.

‘Most forms of Brexit will worsen the government’s fiscal position, probably significantly, reducing the space for new policy initiatives; furthermore, the planned Spending Review is likely to be postponed. Although this highly uncertain, the impacts of Brexit on regions and sectors are, if anything, likely to disadvantage those which are already lagging behind, although it is possible that targeted migration policy—joined up with continued rises in the National Minimum Age and action on education and skills—might over the medium term help the lower paid and less skilled. More broadly, under any scenario, Brexit and the UK’s future relationship will continue to dominate British politics, and this will inevitably continue to distract the political system from the changes to domestic policies that would be needed to make the UK genuinely fairer.’

Click here to read the full report.

The potential savings that would come from no longer paying into the annual EU budget could be quickly outweighed by a costly no-deal Brexit, for example disruptions at border customs.

Nearly a year after the European Union and Japan struck a free trade deal, signaled a positive move towards a free trade agreement amidst a volatile political environment across the globe, with the US-China trade war flaring and the Brexit impasse lingering. The report found that business sentiment in the UK has dropped making businesses turn to alternative countries for investments and trade.

Regarding the performance of the UK economy, the report claimed that the British pound has devalued significantly throughout the 3 years after the June 2016 referendum:

‘Voting to leave the EU resulted in a significant depreciation of sterling, which has raised the cost of living, making UK households worse off. Between 23 and 27 June 2016, sterling depreciated by 11% against the US dollar and by 8% against the euro. It has remained around 10% below its pre-referendum value ever since. A fall in the pound increases the cost of imports into the UK. More expensive imports drive up the cost of living. Consumer Price Index (CPI) inflation rose dramatically following the referendum, from 0.5% in June 2016 to peak at 3.1% in November 2017, before declining to around 2% by early 2019.’

To read the full report click here.

The thinktank’s academics concluded that the whole Brexit process has proven to be a very difficult and time-consuming political issue which has ultimately diverted attention away from governmental policy reforms concerning trade, migration regulations and austerity. The report claims that it is still too early to gauge what the UK’s economy will look like after Brexit has been delivered because the parameters and terms of the withdrawal are still very much up in the air, especially as the Westminster braces for the election and introduction of a new leader of the Conservative party and Prime Minister. Obviously the outcome of Brexit will be influenced by whoever is appointed for the PM role; for example, a Brexiteer could push for a no-deal Brexit on WTO terms whereas a Remainer could drive towards a Brexit deal that includes close ties to the EU such as a Customs Union and free trade agreement.

The report concluded by pointing out that ‘unfortunately, the performance of our political system in the three years since the referendum does not inspire confidence. Again, this is not a comment on either the merits of any particular approach to Brexit or the actions of any party or politician. It is simply an observation that the infighting, paralysis and accompanying media focus on the Brexit machinations at Westminster above all else (and yes, some of us must share responsibility here) have both detracted and distracted from any serious or coherent approach to these issues. At the moment, there appears little chance that this will change, but if we want Brexit to be a success, change is vital.’

The latest news concerning the Conservative leadership campaign has seen Jeremy Hunt urging Boris Johnson to be more transparent.

‘What Boris needs to do is to engage properly in this leadership debate, not to shy away from the Sky News live debate that is scheduled for Tuesday evening which he’s been invited to, I’ve said I’m willing to go to. This is an audition to be the Prime Minister of the United Kingdom and Boris needs to show that he’s prepared to answer difficult questions’

To view Jeremy Hunt’s full statement, click here.

With Boris Johnson unwilling to commit to any definitive answers concerning his policies for Brexit, Mr. Hunt suggests that many of Johnson’s voters are being torn apart by the fact that they don’t know where he stands on key issues.

When Boris Johnson was asked whether a candidate’s private life has an effect on their competence to lead the country as Prime Minister, he replied:

I think what people want to know is whether I have the determination and the courage to deliver on the commitments that I’m making and it will need a lot of grit right now and I think people are entitled to think about this.’

Click here to watch the full interview.     

The police were called to Boris Johnson’s premises on Friday morning after neighbors reported concerns. Consequently, a survey demonstrated that Mr. Johnson’s support had dropped by 16 percent, effectively boosting Jeremy Hunt’s position. Throughout the Tory leadership campaign, Jeremy Hunt has been an advocate of a no-deal Brexit, claiming that he would depart from the EU on October 31st without a deal in place should the EU fail to compromise on various elements of the withdrawal deal.

Criticism escalated after Sky axed its debate show which would have centered around key Brexit policies as Boris Johnson turned down the invitation. Jeremy Hunt said it was a ‘disrespectful’ and cowardly thing to do.

Conservative MP Priti Patel told Sky News that politicians who are delving into Boris Johnson’s private life are simply losing sight of the more important issues that the UK is facing with the Brexit deadlock a pressing topic for the future of the country and the economy.  

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