Now economic growth is far behind the eurozone, and GDP sometimes drops slightly. The pound is still relatively weak against the dollar and euro. However, the current corona crisis masks Brexit’s situation, making it difficult to explain the latest figures and developments.
UK Economic Crisis & What it Means For Investors
Uncertainty about future relations with the European Union (now the UK’s largest trading partner) means that no investment decisions have been made in the country. Even if the withdrawal agreement brings relief and temporary stability, another path remains before the UK-EU free trade agreement is reached, and progress is tight. The positions of the two negotiating partners are still far apart. In addition to withdrawing from the Customs Union, it cannot be excluded that it will soon return to WTO regulations.
However, the UK is in the process of finalizing a free trade agreement that could come into effect after the end of the transition period. However, some negotiations with large contractors such as the US are still difficult, and the UK as a single market must absolutely compromise the EU’s foreign trade relations. After all, the EU itself is the UK’s most important sales market.
UK investment environment. Which industries have great potential?
The impact of the Brexit problem is that there are fewer investment decisions in a positive sense. The entire business cycle is slowing down as the company operates “as usual”. Consumers cut their spending hoping there could be another downside.
In the face of Brexit, automakers have significantly reduced their investment obligations. But there are also positive signs in some places, such as checking or expanding production lines. The expansion of electric vehicles and infrastructure and energy projects continues to be great potential. The government is also considering further tax cuts to make the UK an attractive place for investors. However, there are no specific recommendations other than the decision to cut corporate taxes a long time ago.
How does Brexit affect Britain’s attractiveness to skilled workers?
In EU, the “withdrawal agreement” provides some form of inheritance. In the UK, EU citizens can apply for “settled” or “predetermined” status by the end of 2020. As early as 2021, the government proposed new immigration rules based on a point system and employer sponsorship.
However, the attractiveness of the UK for a worker position is plagued by uncertainty about what future jobs for EU foreigners will look like in the country. The UK is still only appealing to qualified workers due to its language and internationally recognized educational institutions, but the UK is declining because there is no guarantee that permanent settlement will be possible. As a result, immigration from European countries is decreasing. EU companies are already considering alternatives, especially in terms of further developing its position in and outside the UK.
What do you think of Britain’s progress?
With its 66 million inhabitants (roughly), the UK remains to be an important market and there are quite a few new trade prospects. However, this is a long-term view. In the short and medium-term, long-term political phases, economic uncertainty, and lack of predictability can be expected. This generally affects the economy, or at least inhibit its growth potential. Now the prognosis for the future will largely depend on the outcome of the negotiations on free trade agreements. Also, this year’s corona crisis has put a huge burden on the economy.