The suspension of the British Parliament last week creates a scenario where a hard (no-deal) Brexit is likely to occur, and the British economy is not prepared for this possibility. British economic figures have already shown the initial impact of a no-deal Brexit, but these figures are expected decrease drastically when the U.K. officially leaves the European Union. These economic figures have shown that British businesses have been hit especially hard since the Brexit vote. Businesses, within the United Kingdom, have recently failed to invest significant resources into economic capital, out of fear of an economic recession, and this has led to a significant drop in economic productivity and output. Economic output has already “contracted 0.2 percent in the second quarter” with the expectation of further contractions. The Bank of England (BoE) recently estimated that that the U.K. has “forfeited 3% of its national income in the three years since voting to leave the EU” and has started to make preparations to combat the looming economic recession. Overall, a hard Brexit will cause fundamental changes to the British economy and will cause a recession on the size of the 2008 financial crisis.
It seems so ridiculous that knowing how the economy is currently suffering (and will continue to suffer after a hard Brexit) not enough measures are being put in place to avoid economic doom. Britain would have to strengthen their trade relationships with the rest of the world to make up for what they have lost. There is no question that the macroeconomy will suffer and it will take a couple years to bounce back.
ReplyDeleteWith Brexit likely to occur I believe the British business will still be likely to suffer. I believe that Brexit will greatly impact the British economy in a negative and will cause repercussions that will take the economy years to recover.
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