The consequences of Brexit – good or bad?

The British pound has been under a lot of pressure recently especially after UK Prime Minister David Cameron announced the data of the referendum vote for the UK to leave or stay in the European Union.

If Britain leaves the EU, this would cause a lot of uncertainty with regards to the UK economy until new relationships with Brussels and non-EU countries were established. This would create an unstable period of low investment with the risk of a run on the pound. Foreign investors could stop lending to Britain in the short term, choosing to wait and see at a time of upheaval.

Of greater concern in financial markets is the possibility of a sudden outflow of money from the UK, which could make the country’s current account deficit of 5 per cent of national income difficult to finance.

However, some would take another view and believe that a “Brexit” – a UK outside the EU – wouldn’t be that bad. They say that membership of the EU is not one of the most important issues in British economic prosperity. Though trade matters and ties with the EU would deteriorate, that would be offset by better relationships with other nations. The other main forces behind economic growth — investment, skills, competition, innovation and entrepreneurship — would remain intact.

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Source:: The consequences of Brexit – good or bad?

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