The UK: Net Spending and Growth
The United Kingdom: Economic Challenges and Opportunities
As of December, 16th 2016, the economy of India surpassed the U.K in GDP for the first time in 100 years. This is primarily because of the British pound’s 20 percent decline following the Brexit. However, the problems associated with Brexit are beginning to look increasingly self-inflicted, and so far, there has been no significant damage done to the U.K despite the doom and gloom predictions.
When it comes to economics, self-fulfilling prophecy is a powerful force. If people think the U.K economy is going to fail spectacularly, they will cut spending and investment as well as move capital out of the country. These actions will lead to a recession even if one would not have occurred otherwise. A perfect example of this concept is the pound. Often decried as a negative effect of Brexit, it is actually a negative effect of the reaction to Brexit. If people were confident in Brexit and the U.K. economy, the pound would not be down 20 percent. Inflation and other predicted problems would not occur.
Delays are Bad for the Economy
The longer the Brexit negotiations are delayed, the more economic challenges the United Kingdom will face.
According to Barclays, this will cost the British economy 65 billion Euros in canceled investment. This decline is simply because investors are hesitant to invest or expand in a country that may have dramatic regulatory and economic changes in a few years, not to talk of currency volatility and the threat of inflation.