United Kingdom: Brexit weighs purchasing power in the long run

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One study found that it would take ‘several years’ for the UK economy to fully recover from the aftermath of Brexit.

Family income is being dragged out.

Family income is being dragged out.

AFP

A study by the Think Tank Resolution Foundation on Wednesday warned that the effects of Brexit could weigh on the purchasing power of families in the long run. The release of this new study comes on the same day that the British statistics firm ONS announced a new rise in inflation, triggering a severe crisis in the cost of living in the country. Post-Brexit Trade Agreement According to the study, the overall impact of the “weakening of the pound and the fall in investment and trade” on the overall impact of the “reduction in household income” ended with the EU.

“After the referendum, Brexit contributed to the rising cost of living and the fall in business investment,” the think tank said. Over the next decade, the country will be “1.3% lower in productivity” than in the absence of Brexit, while wages in real terms, i.e., 47 470 per person per year, will fall in line with the effects of inflation.

Since Brexit came into force on January 1, 2021, “the biggest change in the UK’s relationship with the rest of the world in almost half a century”, the exit from the EU “weighs on transparency and competitiveness” The British economy in general, the Resolution Foundation observes. But despite the UK seeing its share of imports from the EU shrink, the country continues to maintain its share of exports to its continental neighbors.

Bad news for exports

UK companies need to adapt: ​​’Given the extra legitimacy’, UK companies sometimes choose to ‘send directly to an EU country and use distributors in the EU’ rather than ‘exporting directly to smaller markets’. “Trade barriers are expected to outpace production in agriculture and services – especially in highly regulated professional services -” Think Tank predicts. “This is bad news for UK exports because 20% of our services exports to the EU fall within the highly regulated finance and insurance category,” the study added.

(AFP)

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