Please note that uncertainty is an economic nightmare certainty. For all countries, not just one. Brexit is not a decision I like and I think with passing time, the many things I debated about with friends who supported Brexit start to show itself. This is not a good decision, economically. It’s like Malaysia telling ASEAN that we want to be out of ASEAN for some national reasons. Hmm… This also proves again that majority need not be making the best decision at all times. It depends on the ‘marketing’ effort and the channels used to sway those opinions. There are many good examples of all these majority kind of decisions in the world we live in today. Anyway, let’s look at the actual economic damage to UK’s economy thus far with Brexit still in uncertainty.
Article in cnn.com here. According to Bank of England (BOE), the UK economy is now 2 percent smaller than it would have been if the UK chose to remain with the EU. The economic output lost since the referendum is worth about £800 million (RM4.9 BILLION) per week, or £4.7 million (RM25 million) per hour. 7,000 finance jobs are also leaving Britain. BOE has said that the potential fallout from this would be worse than the 2008 financial crisis. The UK was the fastest growing G7 economy when voters went to the polls in 2016. It is now at the bottom of the G7 ranking. Investment by UK companies fell 3.7% while the rest of the G7 saw business investment growing by 6%. The pound plunged 15% against the dollar after the 2016 vote. This meant higher prices for imported goods and resulting in a decline in people’s income value. Top officials at the Confederation of British Industry and the Trades Union Congress said in a letter to British Prime Minister Theresa May, “Firms and communities across the United Kingdom are not ready for this outcome. The shock to our economy would be felt by generations to come.” Article in cnn.com here.
Transparency is an important factor for any economy. Businesses could then be able to plan their expansion plans on a timely manner. However, even when there’s full transparency but there’s uncertainty, all businesses would have to stop any expansion plans because a wrong decision may mean the end of their business. Property developers building homes targeted at the financial sector employees for example may now have to choose between building in London or in another European country instead because there is a high chance of a large number of finance jobs are leaving London! I still hope that this Brexit decision may be replaced by Bremain instead. We will just have to see how the politicians from all sides could think rationally, shake hands and decide for the UK.
Next suggested article: Financial stability an issue from Brexit (much earlier article)