UK Economy Solid Post-Brexit According to Industry Leaders
Short-Term Pain Gives Way to Long-Term Gain for the UK
Prime Minister Theresa May has not yet invoked Article 50 of the Lisbon Treaty, but already plans are afoot to expedite the UKs exit from the EU. A surprising endorsement has been heaped upon the UK economy by none other than Axel Springer’s CEO, Matthias Dopfner. This media mogul’s opinion carries tremendous weight in the European Union and globally, and he believes that the UK economy will prosper relative to the EU within 3-5 years. Dopfner is of the opinion that the UK will be inherently more attractive to foreigners outside of the European Union once the Brexit is done and dusted.
It is true that the UK economy will have to endure volatility over the short-term, as evidenced by weakness in its currency, housing market and sticky wages. While it is nothing more than speculation about the UK at present, the CEO is skeptical of Europe’s financial standing. Pundits agree that the EU institutions such as the IMF, EC and other governing bodies are in the process of transferring funds from successful nations to poorly performing ones. This is a disincentive to investors. The UK is now moving towards a different economic model – a free market model.
UK Immigration Policy Set to Benefit the UK Economy
Immigration was always a hotbed issue with Brexiteers. UK voters argued that the open border policy was failing dismally and that’s precisely what allowed former London Mayor Boris Johnson to spearhead a winning campaign. With a stricter set of immigration rules in place, the UK will be better poised to allow qualified immigrants into the country to benefit from the UK economy. This is in direct contrast to the current open border policy which allows anyone from any EU country to move freely between nations. This inherently leads to a net drain on the social welfare systems of wealthier countries. A huge chunk of European business activity is invested in the United Kingdom, notably the City of London. As the world’s epicentre for currency trading and banking, London is crucial to the financial fortunes of global enterprises.
The CEO of Axel Springer believes that the Brexit decision should be seen as a way to adopt fresh new thinking in Europe. He is of the opinion that the UK economy will be better positioned to attract foreign capital and remain a vital business hub for the global economy. The fact that there has been little if no impact on the UK economy since the Brexit vote is perplexing to some. There has not been a collapse in confidence in the UK economy, according to the Office for National Statistics (ONS), but the service sector remains a concern. The OECD has upped its guidance on the UK economy GDP growth rate for 2016 to 1.8%, from 1.7%.
Punters Go Long on Long-Term UK Recovery Post Brexit
The growth rate for 2017 has been dropped to 1% from 2%. There is still tremendous volatility as it concerns the nature, scope and timing of the UKs extrication from the EU. UK consumers remain confident about the improvements in the economy, but those levels are beneath the pre-Brexit (June 23, 2016) level. Strong retail sales in the UK are a boon to the economy, but the lag effect is bound to come into play towards the end of the year. With the BOE already poised for another rate cut, or quantitative stimulus, there are plenty of options on the table according to spread betting experts.
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About Brett Chatz
Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for spreadbettingreview.co.uk.