Language
Country/Area
No result found
The British economy after Brexit: Will it really shrink as predicted?
As the United Kingdom officially leaves the European Union on January 31, 2020, debate over its economic future continues. During the process of Brexit, discussions about a no-deal Brexit are prevalent, and many economists and analysts have made various predictions about the economic impact of the UK after Brexit based on different models. Whether the British economy has really shrunk as some forecasts have predicted has become a hotly debated topic.
According to a 2016 analysis by the British Treasury, if there is no deal to leave, the UK's GDP will decrease by 7.5% in 15 years.
As the Brexit day approaches, various government departments have stepped up preparations for a no-deal Brexit. Various contingency plans, such as Operation Yellow, were developed in an attempt to reduce possible economic shocks. Although there are many uncertain factors so far, economists have provided some perspectives to discuss the future.
The predicted impact of a no-deal Brexit
Many experts have conducted in-depth analyzes of a no-deal Brexit and predicted its possible short- and long-term impacts on the British economy. For example, according to a report by the International Monetary Fund (IMF), in 2021, the UK's GDP will shrink by 3.5% compared with the future agreement. In addition, according to forecasts from the British Treasury and other economic research institutions, the British economy is likely to shrink by at least 2% before 2021.
Some economists have questioned the reliability of these forecasts, saying fears are overdone and believe the long-term effects may not be that severe.
Implementation of preparations
The British government has stepped up its backup plans in the face of the possible impact of Brexit. In the scenario of a no-deal Brexit, the UK may face a huge number of customs declarations, increasing from 55 million to 240 million per year. The government has made policy adjustments and established special departments for this purpose.
The impact of different industries
A study of various industries in the UK shows that agriculture, car manufacturing and financial services will be affected to varying degrees by a no-deal Brexit. Within the automotive industry, for example, some large manufacturers have indicated that they will have to consider closing factories if post-Brexit trade conditions are unfavorable.
Representatives of the mutton industry warned that a no-deal Brexit would result in the loss of 40% of export opportunities in the UK mutton market and may trigger unrest among farmers.
Reaction to global trade
Not only the UK, but also the entire EU and other economies have deepened discussions on possible consequences during this period. According to the UNCTAD report, Brexit may affect exports from developing countries, especially those dependent on the UK market. The UK may add new trade agreements to make up for its losses with the EU.
Reflections on the past and future
As the economic community clashes with different views on Brexit, the future economic situation has become increasingly foggy. In the short term, economic growth may be suppressed based on the crazy hasty market reaction, but in the long term, the UK still has the opportunity to stabilize the market through new trade agreements and diplomatic strategies.
An analyst pointed out: Brexit is not only a regional event, but will also change the ability of non-EU countries to export to the British market.
In general, the UK’s economic prospects after Brexit are not single, but diverse and complex. Although many economic factors and circumstances remain uncertain, all the challenges posed by Brexit will be a test for the UK and its government. How will the economic status quo develop in the future? How should individuals and the country in the UK prepare to meet new challenges?
