If we would go back a year before, nobody had bet for such a change that we recently experienced. Great Britain people decided in a referendum to separate from the European Union. The decision is quite relevant, as it will change the financial and economic landscape.
To begin with, Prime Minister Theresa May announced two weeks ago that her Government will formally start the negotiations with Brussels next spring to leave the European Union. Markets reacted immediately with a new drop of the sterling pound against other currencies. On the contrary, the benchmark stock index FTSE reached its all-time high.
What the economic policy refers, Chancellor Phillip Hammond pointed out in the Conservative Party last meeting that new investments should be tackled to improve the business. In addition, he hinted that there could be tax cuts and interest rates reductions. To sum up, the Government will apply an expansive economic policy if necessary for the “rollercoaster” in the EU talks, although they do not give up the plan to eliminate the deficit by 2020.
Another big change in the UK will be related to trade (currently, a competence managed by the EU). Great Britain will be again independent to impose custom duties and will have to negotiate trade agreements with every country. However, it is difficult to think that the country will not keep a kind of “special status” in this field with the EU.
There is another great question to answer: what will financial entities and companies do when the Brexit become a reality? Will they stay or go to another city? Frankfurt and Paris sound as possible alternatives. And finally, what will happen with the foreign workers? Will it be more difficult to enter UK to work? Also for EU citizens?
All these changes in the financial and economic landscape will have also effects in people’s daily life. Let’s see what will happen, but we will be witness of deep changes in UK in the next two years.