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Commercial Department: Beyond Our Borders: The United Kingdom: December 2017

 

Beyond Our Borders: The United Kingdom

The United Kingdom remains one of the most powerful countries in the world, and boasts the second-largest economy in Europe, after Germany. But in the wake of U.K. voters’ surprising decision last year to leave the European Union, the country faces difficult questions about its economic future.

The U.K.’s economy was severely hampered in the wake of the worldwide financial crisis in 2008, but it eventually rebounded, with the size of its economy bouncing back to pre-recession levels by 2013. But a June 2016 referendum in which U.K. residents voted to leave the EU — a move known colloquially as “Brexit” — left the future of trade deals between the U.K. and the EU in limbo.

Leaving the EU is a two-year process, expected to be completed in March 2019. Negotiations between the U.K. and EU have been going slowly, however, and the deadline may need to be extended. Many specifics have yet to be decided, and it’s still not certain whether the U.K. will ultimately implement a “soft” or “hard” exit — that is, whether it will largely retain existing trade and travel agreements with EU countries, or leave without any kind of clear exit agreement in place.

Many analysts contend it’s still too early to know exactly what effect Brexit has had on the U.K.’s economy, but it’s clear that the most dire predictions have not come true. Although many analysts forecasted an immediate recession and a decline in gross domestic product (GDP) in the wake of the Brexit referendum, a Cushman & Wakefield report points out that, after the Brexit vote, the U.K.’s GDP grew faster than initial forecasts.

The country’s economy expanded by an estimated 1.8 percent in 2016. This past May, the Bank of England adjusted its forecast for 2017 GDP growth to 1.9 percent, down from a forecast of 2 percent this past February. Inflation jumped to 2.9 percent as of this past August, up from 2.6 percent the prior month, but unemployment fell to a 42-year low of 4.3 percent as of this past July, Business Insider reports.

Commercial real estate investment is flourishing in the country, bolstered by a post-Brexit weakening of the British pound. Foreign investment, largely from China and Hong Kong, has been encouraged by the weak currency, which effectively gives investors a 20 percent discount compared to pre-referendum currency values.

Some financial professionals in the U.K. may be looking to jump ship in the wake of the Brexit vote, however. According to a report from job-search website Indeed, the number of U.K. financial professionals seeking work in Ireland — which is not part of the U.K. — rose 37 percent from pre-Brexit levels. U.K. finance professionals are reportedly concerned about the uncertainty Brexit has engendered in the financial markets and see the Irish job market as an attractive alternative.


 

Steven Wyble is the former online content editor of Scotsman Guide Media. For questions about this article, call (800) 297-6061 or articles@scotsmanguide.com.

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