Leading international experts are of the view that recession looms large for the UK owing it its decision to curb immigrants’ movement and severe ties with the 27 member nation bloc EU. After the World War, very few events could have had the drastic impact on the economy of the UK as the Brexit referendum.
The UK economy is deeply entangled in the functioning of the EU be it from standards on consumer products to subsidies for farmers and eliminating all kinds of trade impediments. Its economy is already being shadowed by rising inflation and sharp fall in the pound. With the commencement of the formal two-year exit talks with the EU, the signs of economic adversity are further renewed.
The economy of the UK is already showing signs of weakening owing to Brexit ambiguity, restricted immigrants’ movement and the increased cost of imports owing to fall in the pound. The economy of the UK is now lagging behind even nations such as the Greece by growing just at a rate of 0.2% in the first quarter of 2017. This was the lowest growth amongst all the G7 nations, as quoted by the Indian Express.
If the UK walks out of the EU exit talks without any trade deals, the scenario of hard Brexit, then this could actually prove the doom mongers of pre-Brexit to be right. Standard & Poor’s the rating agency in the UK has revealed in its report that in this scenario UK will incur huge financial losses as it exports the highest to the EU than compared with any other EU nations when calculated for the proportion of the economy.
The agency has further elaborated that the risk is further inflated by the fact that services sectors in the UK such as the banking account for a large share of these exports. It is very less likely that services will be acceded by the EU for any immediate trade agreement with the UK.
The future of London is ambiguous owing to its central role in the financial sector of the EU. With the exit of the EU, UK’s financial services firms will by default lose the right to operate in the 27 member EU bloc which will be a huge hindrance. EY has already revealed in its survey that London was trailing behind as one of the three most attractive cities in Europe for businesses owing to the UK curbing immigrants’ movement.
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