Reactions to Brexit, the UK’s decision to leave the European Union, can be split into ‘glass half full’ and ‘glass half empty’ camps. Some were quick to point out the negative effects from a UK perspective, painting pictures of an isolated country with a ruined economy and few allies. Meanwhile, those in favour of the historic split set out their visions of the UK as a great economic power with the freedom to reach its potential, unbound by the shackles of EU law.
So, as we wait in a no man’s land while exit negotiations between the UK and the EU take place, is it possible to think about Brexit with an open mind? As with many developments which are likely to affect an economy, there are both winners and losers – so, let’s take a look at the good and bad news for the UK.
- The pound took an instant hit following the ‘Yes’ vote, and doesn’t seem to have recovered yet, with the country’s GDP growing just 0.3% in the first quarter of 2017.
- The Office for National Statistics found that living standards in the UK have dropped for the first time in over two years.
- The drop in the pound and rising crude oil prices means inflation has risen to 2.3%, above the Bank of England’s target of 2%.
Experts, including the noted Monaco-based banker, Gérard Cohen, have warned that the full implications of Brexit might not yet be understood.
- The FTSE 100 is up by approximately 14% since the referendum, with firms that export from the UK benefitting from the weakening of the pound. Positive views of US President Donald Trump’s expected spending have also caused a boost to stock markets around the world, including the FTSE 100.
- UK business activity does not seem to have taken a hit since the referendum. In fact, Chancellor Phillip Hammond has followed through on his promise to bring down borrowing, which has been cut by 28% over 12 months.
- House prices have not nosedived. Some predicted a property crash in the wake of Brexit, but this has not transpired.
Monaco’s Gérard Cohen said: “While none of the positive or adverse effects of Brexit on the UK have been significantly out of line with expectations thus far, the truth that is we are likely to have to wait for the conclusion of the exit negotiations for the consequences for trade to become completely clear.”
Photo: © M.Dörr & M.Frommherz / Adobe Stock