16th April 2019
An outline of how well prepared is the British economy for its divorce with EU
In the first week of September, British chancellor – Sajid Javid announced an additional £2 Bn in new Brexit funding for government departments. This was on top of the £2.1 Bn he had announced in late July, his first major policy announcement. The latest announcement brings the total spent on planning and delivering Brexit to upwards of £8.3 Bn since the 2016 referendum. No small numbers by any means.
The funds are to be spent on critical projects linked to Brexit delivery post Britain’s withdrawal from the EU and includes funding for the Home Office to support Border Force capability. Funds would also be made available to the Department for Business, Energy and Industrial Strategy to explore the development of UK’s own global navigation satellite system (GNSS). The strategy is to make sure that no EU partnered projects are completely stalled, especially in the event of ‘no-deal’.
The funds will also help the government in provisioning for a nationwide advertising campaign, facilitating Britons living abroad, ensuring supply of medicine and improving the infrastructure around country’s ports. The economic impetus announced would largely indicate that the economy is fortified enough to handle any shocks emanating from Brexit. The PM – Boris Johnson has in fact has termed Brexit as a “massive economic opportunity”.
However, there is a large faction including the Bank of England that is not so confident on Britain’s preparation or its ability to come out unscathed in the aftermath of Brexit. Although the bank has made a reversal on its worst case estimates for the damage a no-deal Brexit would impose on the economy, it warned in September that opting out could still curtail the country’s GDP by 5.5%.
The British economy has been closely intertwined with Brexit this year. The first quarter saw output boosted by UK manufacturing firms firing up production to fulfill overseas demand amidst fears of border disruption after a no-deal Brexit on 29 March, the original date when UK was supposed to leave the EU. Conversely, in the second quarter output was saddled in part due to automobile makers shuttering plants in April in anticipation of a turmoil after 29 March.
It is essential for businesses of all size and scale to stay abreast with the developments in the economy caused by Brexit because preferred on not, it is going to have an impact on the future of the British economy.