Brexit is the biggest risk to the UK economy, will Brexit be Positive for the UK Economy?
Data showed the economy expanded 0.4 percent in the three months through June, double the rate of the snow-blighted previous quarter. GDP is now expanding at an annualized rate of 1.5 percent, the level policy makers say is the U.K.’s speed limit.
The overall picture is of an economy performing moderately better than it did three months ago. Check the infographic, a picture says a thousand words.
The UK’s currency, of course, fell through the floor in the early hours of 24 June 2016, when it became clear that the Britons had voted to rupture their 43-year membership of the European Union.
Indeed against the dollar, sterling endured its biggest intra-drop on modern record (11.9 percent), hitting a 31-year low of $1.3679.
Against the dollar, the currency continued to fall in the months after the vote, bottoming out at around $1.21 in January 2017, when Theresa May made it clear that she planned to pull the UK out of the EU single market and the customs union – a pretty hardline interpretation of Brexit.
But, since then, the currency has come back quite a lot. It’s currently trading at around $1.41, around 5 percent down on its pre-referendum peak. However, much of this recovery seems due to the weakness of the dollar, rather than the strength of the pound.
If we look at the trade-weighted value of sterling – which values the UK currency against a basket of all our trading partners’ currencies – it is still down around 9 percent on its level on 23 June.
As to where the exchange rate is likely to go next, analysts are split. Some think it may strengthen as steady progress towards an amicable separation from the EU is made. Others insist that sterling remains highly vulnerable to a new sell-off.
Data showed that the UK does not need a trade deal to trade! The UK already trades heavily with many countries across the globe with which it has no trade deal. We successfully trade with these countries under the rules of the WTO and we can continue to do likewise with EU countries in the future. The same is currently the case for the United States, Japan, China, and most of the world.
Overall, the economic figures suggest the UK will gain. In any industry, there may be firms that think they will benefit from Remain. But their interests, as with other vested interests, are theirs, not the UK’s. Therefore, the views of business are likely to vary by size of the firm, by the sector they are in, and by their business model.