The triggering of Article 50 back in March served as a confirmation that the UK would be leaving the EU after more than 40 years as a member. When the UK does leave in 2019, there will almost certainly be implications for the economy, and this has been reflected by the uncertainty which has been present since the June 2016 referendum result. This article will look at some of the possible results of Brexit on the economy.
The Single Market
The European single market is the staple economic system of all EU member countries and allows the free movement of people, goods, services and capital within the EU. If the UK leaves this, which looks very likely, then it is approaching a vast unknown economically.
Having the majority of its trade roots in Europe, the British establishment will have to re think trade strategy and find a way to keep the economy afloat if/when ties are cut. This could, at least in the short term, lead to a weaker economy overall, as it currently functions on having access to the single market.
The Pound
With the decision to leave the EU being a controversial and unexpected result, the pound crashed against the euro after the referendum. Those trading forex with brokers may have been ecstatic if they owned a lot of euros, but this dip caused widespread concern that the UK economy could suffer in the long term.
The pound recovered swiftly, but the result has nonetheless left many fearing over the future of the currency once the UK leaves the EU. It is well documented that political changes often have a decisive effect on currency, and this leaves the pound open to another potential crash if the economy is not prepared for Brexit by 2019.
Jobs
One of the biggest concerns over Brexit is the effect it will have on jobs across the UK, especially if international companies start to move away. Nestlé recently announced that they would be cutting 300 jobs and moving production of the iconic Blue Riband to Poland. This could start to become the norm as companies fear over their future in the UK.
Many jobs rely on access to the single market, so it will be interesting to see how the British government caters for this in Brexit negotiations, and if they can replace the jobs should access be lost.
New Deals
Ultimately, the future of the UK economy may rely on the future trade deals it decides to pursue after Brexit. Whether other countries will be receptive to any form of deal remains unknown, but relations with some Gulf countries like Saudi Arabia are seen to be strong, and open for development.
The UK will need to present itself as an attractive base for international companies, whilst endeavouring to strengthen its own industry and services. This will undoubtedly be challenging for an isolated island currently dependent on European trade.
The future of the UK economy certainly hangs in the balance. Whilst Brexit may bring new opportunities for Britain away from Europe, it will also present immense challenges for the stability of the economy and the pound.
