Scribd
Upload
20 views13 pages

Sana Fayaz UK BREXIT Macro Eco

Uploaded by

sanaits12
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
20 views13 pages

Sana Fayaz UK BREXIT Macro Eco

Uploaded by

sanaits12
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 13

SANA FAYAZ

United Kingdom has experienced an economic environment


characterised by low growth, high inflation, rising government
debt – a situation further accentuated since then by the Covid-
19 pandemic and the political uncertainty with UK seeing 3
PMs in just two months. In the last quarter of 2023, UK
economy entered recession after recording two consecutive
quarters of negative GDP growth.

BACKGRO
UND TO
BREXIT
Overview of the
UK's Decision to
Leave the EU
The Brexit process was initiated following a referendum held on June 23, 2016, in which 51.9%
of voters supported leaving the EU, while 48.1% voted to remain.
EVALUATION OF THE MACROECONOMIC
EFFECTS OF BREXIT ON KEY INDICATORS

Impact on GDP growth

Office of Budget Responsibility calculated that Brexit would


cost 4% of GDP per annum over the long term.

According to the National Institute of Economic and Social


Research (NIESR, UK real GDP is some 2-3 per cent lower
due to Brexit,
Inflation

Since late 2021, the prices for many essential


goods in the United Kingdom began increasing
faster than household incomes, resulting in a
fall in real incomes. This was caused in part by
a rise in inflation in both the UK and the world
in general, as well as the economic impact of
issues such as the COVID-19 pandemic,
Russia's invasion of Ukraine, and Brexit.
Trade & Productivity
. Growth in UK goods trade (exports plus imports) has fallen
well behind the rest of the G7. At the end of 2023, UK goods
trade was around 10 per cent below 2019 levels, while it was
around 5 higher on average for the rest of the G7 in the third
quarter. Meanwhile, UK services trade growth has been the
strongest in the G7.

OBR forecasts that the volume of UK imports and exports will


both be 15 per cent lower in the long run than if UK had
remained in the EU, reducing the overall trade intensity of GDP.
And this leads to a 4 per cent reduction in the potential
productivity of the UK economy.
Investment
Unemployment Statistics: Government debt
Unemployment rates have remained relatively low, reflecting labor
market resilience and government support measures. However,
structural changes in the economy and sectoral disparities contributed
to regional variations in unemployment levels.

Brexit increased the volatility in financial


Unemployment rate (aged 16 and over, seasonally markets and currency fluctuations. Government
adjusted) was 4.2 % for Dec ’23 -Feb ’24 as per ONS debt reached to 96.6% of GDP in 2022, a level
last seen in the 1960s
Poverty and Inequality/GINI Numbers:
Department for Work and Pensions (DWP) data shows
that 14% of people in the UK were in absolute low
income before housing costs in 2022/23, and 18% were in
absolute low income (absolute poverty) after housing
costs.

Over the longer-term, poverty rates have reduced since the late
1990s for children, pensioners, and working-age parents.
However, for working-age adults without dependent children
the likelihood of being in relative low income has increased.
Regional disparities within the UK and Sectoral impacts of Brexit
the differential impact of Brexit on
different parts of the country Manufacturing: Uncertainty surrounding future trade
arrangements and regulatory frameworks weighed on
manufacturing sector activity, leading to delays in investment
decisions and supply chain disruptions.
Agriculture: The agriculture sector faced uncertainties
regarding future access to EU markets, labor shortages, and
changes in agricultural policy. Concerns about potential trade
barriers and regulatory changes impacted investment decisions
and supply chain dynamics.

Financial Services: The financial services sector grappled with


uncertainties surrounding the future of passporting rights,
regulatory equivalence, and market access. Brexit-induced
uncertainty prompted some financial institutions to relocate
operations to EU member states to maintain access to the single
market.
Migration

In the year to June 2022, the ONS estimates that


504,000 long-term net migrants arrived in the
UK, twice the average numbers seen between
2010 and 2020. While net EU migration is now
negative at minus 51,000, this has been more
than offset by a large increase in non-EU net
migration to 509,000.
UK GOVERNMENT'S RESPONSE AND
POLICY MEASURES
Fiscal Policy Interventions
Increased Government Spending:
Tax Cuts and Incentives
Debt Management

Monetary Policy Interventions


The Bank of England (BoE) implemented
accommodative monetary policy measures to support
economic growth
Interest Rate Adjustments: The BoE lowered
the benchmark interest rate
Quantitative Easing (QE):

EU–UK Trade and Cooperation Agreement (TCA)


Trade Agreements and Economic Partnerships
Case of the UK mini-budget crisis, 2022
On 23 September 2022, the Chancellor of the Exchequer, Kwasi
Kwarteng, delivered a Ministerial Statement entitled "The
Growth Plan" to the House of Commons. The statement was
delivered against the backdrop of a cost-of-living crisis. Widely
referred to in the media as a mini-budget (not being an official
budget statement), it contained a set of economic policies and
tax cuts

It was immediately followed by a sharp fall in the value of


pound sterling against the US dollar as world markets reacted
negatively to the increased borrowing required
WAY FORWARD FOR THE UK'S ECONOMY

Diversification of Economic Base: Addressing deep-seated structural challenges:

Investment in Infrastructure: Mitigating External Factors:

Skills Development and Education:

Promotion of Innovation and Research:

Policy Reforms for Economic Resilience


Fiscal Sustainability
Monetary Policy Framework
Regulatory Environment

Political Stability:

THANK

You might also like