In July, the United Kingdom voted to leave the EU. It was a massive day in the history of the country, and Europe. No country had ever left the EU before then, and many people believed it wouldn’t happen. However, the ‘leave’ votes narrowly beat out the ‘remain’ ones, and the UK will have to fend for itself.
Of course, nothing is going to take effect for a few years yet. There are lots of confusing and long negotiations that must take place before Britain leaves the EU. So, the British public now faces a long wait to see what will happen in the build up to the official exit. How much is going to change? What will happen to the country now?
The thing that’s worrying most people is the financial impact of Brexit. What will leaving the EU do to the financial sector in the UK? And, will this have a knock on affect and disrupt other countries around the world?
Today’s piece will focus on the financial impact of Brexit, and whether or not it’s all bad news.
The British Economy
The news of Brexit was met with a lot of disdain all over the world. European countries were annoyed that such a large financial superpower had left the EU. Mostly, British citizens were annoyed because of what followed the results. David Cameron resigned, a load of other politicians resigned, and the country fell into chaos.
This instability has had an effect on the economy. Businesses and households are confused as to what they should do. Spending has dropped because there’s such a high level of uncertainty around the entire country. To add to this, many people believe that there will be lots of job losses in the next few years. Britain is already in lots of debt, and it’s relied on foreign support to help keep up with payments and keep the pound strong. As you’ll see by checking the current market, the pound is already weaker than it was a few months ago. To help pay off debts, there will be cuts, cuts, and more cuts.
Many experts are predicting yet another recession. Back in 2008, the global recession sparked the birth & evolution of payday loans market. Could a Brexit-related recession have the same consequences? Will people start struggling for money and turn to loans to help them survive? This remains to be seen, and we’ll have to find out what happens in the future. For now, the economy is looking bleak, and there are few silver linings in these clouds.
The Housing Market
The property market is a huge financial part of the UK. Usually, when big things happen, we have a look at this market to see the impacts. Recently, there’s been a huge boom in UK house prices. Prices have been rising for years, making it difficult for the average Joe to buy a house.
Housing experts have said that Brexit will bring about an end to this boom. They’ve already predicted a drop of around 5% in the coming year. Who knows how much prices will drop by the time the UK has left the EU? Of course, there is the argument that prices could stabilize and go back up by then, no one knows yet.
Now, when house prices fall, that’s a reflection on the poor state of the economy. However, is it a bad thing? Surely having more affordable houses is good, as more people can buy adequate homes for their families. Similarly, investors will thrive during periods when the house price is low. You can snag some big bargains and sit on these properties until the market gets back to a better place. Then, sell them for colossal profits!
Brexit doesn’t just affect the UK and Europe; it affects the world too. Many countries, like the USA, have trade agreements with the EU. Now that Britain has left the EU, they have to set up their own agreements.
For other countries, this can be both annoying and negative. It’s annoying because they have to come up with a whole new trade agreement just for Britain. It’s negative because they don’t get special deals they normally would when trading with the EU. This means that it will be tough for Britain to get the same trade agreements that they had when they were part of the EU.
Is this bad? Well, it depends on the deals that they manage to iron out. The new prime minister thinks she can get better deals for Britain now it’s out of the EU. However, it’s highly unlikely this will happen, and imports can cost more.
Brexit has had a huge financial impact on Britain, and many other countries. I feel we’re only starting to feel the minor tremors of a huge earthquake. The next few years will be scary and uncertain times; that’s for sure.