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U.K. Economy Mixed After Brexit

Pound Falls, but Prime Minister May Encourages Optimism

By Mariuxi Mans eld

Staff Writer

It has been ten months since the referendum where the United Kingdom voted to leave the European Union and many economists forecasted a major economic shock for the U.K. economy.

“There were predictions about what would happen to the economy if the United Kingdom voted to leave,” Prime Minister Theresa May told Parliament on March 29 when she signed the letter formally initiating Brexit. “Those predictions have not proved to be correct. We see a strong economy.”

However, the U.K. has two years before Brexit will actually take e ect.

Although the U.K.’s economy grew in the final three months of 2016 due the manufacturing industry, the Office of National Statistics (ONS) said business investment has slowed down and is expected to drop to 1.6 percent in 2017.

The pound also suffered a dramatic fall after the Brexit vote last year. The pound has been 15 percent lower compared to the dollar and 12 percent lower compared to the euro before the referendum.

Dyson, the British company that manufactures high- end vacuum cleaners and household items, said they are “optimistic” and actually reported an increase of their pro ts after the vote.

Exporters have also done well due the decline of the pound. Since the market is cheaper, they reported stronger earnings. Small companies have increased their international sales, luxury cars are looking cheaper to foreign buyers and alcohol companies are booming.

Ipsos Mori, the lead research market in U.K., surveyed 114 of the 500 Britain’s biggest businesses and 58 percent of them expressed that they believe Brexit will have a negative impact on their businesses. 84 percent of them think that if the government gets the Brexit negotiations right then the economy will be okay.

Donald Tusk, the president of the European Council, presented “draft Brexit negotiation guidelines” to the 27 remaining members of the E.U. after Article 50 was triggered.

 

The agreement on future deals between the U.K. and the E.U. “can only be concluded once the U.K. is not part of E.U.” The guideline also adds that, during the transition, the U.K. will still follow regulations, budget, supervision and the overall structure of the E.U. Protection of the single E.U. market is based on “sector to sector approach.”
The time frame UK has tocomplete the process is 2 years. After that period of time, if no extension is agreed, the U.K. automatically leaves the E.U. and all existing agreements.

Brexit Day is Friday, March 29, 2019.

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