Will it Brexit or Bremain?

The economy of European Union generates a GDP of euro 14 tn which makes it second or the largest economy of the world. Source IMF. With Euro 2.5tn United Kingdom is the second largest economy of EU after Germany and fifth largest economy in the world. Sterling is the 3^rd largest reserve currency in the world after USD and EURO.

As a member of the EU, the UK is bound to numerous EU-wide trade and market policies. The majority of the EU trade policies have been beneficial for UK, despite the proportion of the country's exports going to the EU falling from 54 % to 47 % over the past decade. The total value of exports however has increased in the same period from £130 billion (€160 billion) to £240 billion.

After 2016 first quarter result of UK’s economy left analyst and people in topsy-turvy situation. U.K. industrial growth is slowed down and GDP growth boiled down to 0.4% in first quarter which is 0.6% lower than fourth quarter. This down fall is facilitated by 0.9% and 0.4% fall in construction and industrial output respectively. The ray of hope is UK’s service sector which grew by 0.6% and contributes more than 78% in GDP nos. Brexit may not have long term impact on service sector majorly on financial services but would definitely have short term impact, as most of the firms could delay their investment.

No one is sure what would be the final call but if we analyze some of the reports and surveys conducted by prestigious media houses or consulting firms we could get some glimpse about the future of UK’s financial service sector. According to The city UK and PwC survey report if Brexit happens, Britain could lose up to 100,000 jobs in financial space by 2020. It would lead to loss of Euro 12bn sector’s contribution towards UK’s GDP. In present scenario most of the firms enjoy cross border passport service to serve their client which will not happen after Brexit and could increase the cost of service.

I see most of British were always in favor of Brexit. In 2005, more than half (55%) of the UK were against adopting the single currency (EURO), while 30% were in favor.  “In 2007 when the British Prime Minister, Gordon Brown, pledged at the time to hold a public referendum based on certain tests he set as Chancellor of the Exchequer. When assessing the tests, He ruled out membership for the foreseeable future, saying that the decision not to join had been right for the UK and for Europe. Public opinion polls have shown that a majority of Britons have been opposed to joining the single currency for some considerable time and this position has now hardened further”. Source: the balance of EU competency review

Last but not least “there are informed guessing based on past and present voting knowledge Leave voters comprise older Britons who are more likely to vote than young voters who are pro remain. A low turnout will favor leave and a high turnout Remain. Scotland and Northern Ireland will vote for remain and middle England will vote for leave. London will definitely vote for Remain because of its cosmopolitan nature. “Source: The Hindu

What your guess? J

~~~~Ankit Dwivedi