Prior to the Brexit vote, the range of economic predictions on an ‘out’ vote ranged from economic catastrophe to a slow enhanced prosperity free from European binds.
So a month or two on, what is the reality looking like?
The early indicators certainly are leaning towards a gloomier economic outlook. The Bank of England clearly fears the economic indicators and has reduced interest rates and put quantitative easing back on the table. The economic forecast is the worst it has been since 2009 and the banking collapse.
The City of London has reported a reduction in vacancies by 10% during July and there is continued talk of jobs moving to other financial centres with Frankfurt possibly prospering the most.
But what does that matter to the ‘forgotten’ resident of Sunderland? Well, the primary issue will be the extension of austerity that affects the whole country. Prior to Brexit, it was expected of the forecasted growth rates the UK would balance its budget in 2020. With growth slowing quite dramatically since the vote this target is now out of reach and could mean that it is delayed by a number of years requiring public services and spending to tighten its belt further and for longer.
There was clear frustration demonstrated by large parts of the country, outside of London and many resenting what they believe to be a London-centric country and as such cutting the City down to size is good thing. However, with it being such a massive exporter of financial services and contributor to taxation, the idea that there won’t be a ripple effect to contraction in London is difficult to believe.
With regards to movement of labour and its economic impact, there are probably 2 outcomes: it is a condition of access to the single market and nothing much changes; or restrictions are placed and there is a reduction of labour which will serve to create a degree of wage inflation and ultimately reflecting in the price we pay for ours goods and services. So Mr & Mrs ‘Sunderland’ may well find more in their pay packet, but will also pay more for the Frappuccino!
The long term impacts of the ‘Out’ vote will not be known for years. Whether indeed we may well enjoy a freedom of trade that enhances our economy outside the EU or whether we no longer become the ‘go to’ place for investment and business with the pain of over 50 individual trade agreements in, who knows?
Whether you were an ‘In’ or an ‘Out’, it would seem that when the country was still recovering from the last devastating recession, at best, it probably wasn’t the best timing to cast the shadow of economic uncertainty for the next few months or years.
And we haven’t even triggered Article 50 yet……