14 Mar 2017

It’s all about the money – economists’ predictions after Brexit

The UK House of Commons accepted the proposed Brexit bill and now the British government has the green light of speeding the negotiations with the EU by triggering the mystical Article 50. How will people’s lives change and what exactly will happen in the next two years of the process are still questions with uncertain answers. And while politicians are drawing possible scenarios, economists are counting numbers. And according to a saying “when the numbers (facts) speak, even the gods remain silent”.
Some good news
Despite the glooming and worrying predictions to what comes after Brexit, UK economy is slowly but surely growing, as the latest report of British Chamber of Commerce (BCC) shows. The report was announced as a correction to the previous prediction for 1.1% grow for this 2017. According to the new data, the growth will be 1.4%, an increase which has been adjusted after the report from the Office of National Statistics (ONS) predicted a rise in household consumption and consumer spending. The other reason that the BCC has created a more optimistic forecast is the improvement in investments and trade, particularly from businesses based in non-EU countries. The BCC also upgraded its exporting forecast up to 2,7% in 2017 and from 2.9% to 3.1% in 2018.
However, the optimism of the Chamber doesn’t apply for the general predictions of 2018. 2018 is the year after Brexit and is seen as a time of change and uncertainty. According to the BCC forecast, consumer spending will slow down and economic growth will contract to merely a 0.9%. Still the experts stay positive: “More thoughtful and radical moves to improve the business environment would give businesses – and GDP forecasts – a boost during a critical and complex time”, BCC director general Adam Marshall said.
And some not so good news
Leaving the EU will cost the UK the loss of American investments, another economic report from the American Chamber of Commerce to EU (AmCham EU), stated. According to their data, the major part of the £487 billion that came in the UK from US businesses in 2015 was the result of the EU’s membership and access to the single market. The experts from AmCham EU see the limitations of a trade deal between two countries and warn of the dangers of building barriers between the UK and EU countries.”For decades, the UK has served as a strategic gateway to the European Union for US firms and financial institutions. The primary motivation of many US companies to invest in the UK has not been to serve only the UK market but to gain access to the much bigger EU single market,” the report warns.
The Big Question
Almost a year ago, the Brexit referendum seemed more as a call for freedom and independence, a way for the British people to declare strength, defend their national production and chance to build a strong economy. In the months that followed the results of the referendum, it has become clearer that it “is not that simple” and probably there is more to lose rather than to win for the UK. The life of millions will be changed and the consequences will affect generations. Yesterday, Scotland’s first minister required a new Independency Referendum because last year most of her fellow countrymen preferred the armada of EU rather than the single UK ship. Caught in a game of power, Theresa May and her government, look like stubborn children who prefer to play on their own, rather than share their toys with the other children. But playing on your own is getting boring…So is it worth it?