Wednesday, February 17, 2016

Impartial report on The economic impact of ‘Brexit’

Produced by Capital Economics for Woodford Investment Management, this is an impartial report on
The economic impact of ‘Brexit’:  https://woodfordfunds.com/economic-impact-brexit-report/

Some quotes:  

Immigration - Immigration from the European Union is currently boosting the workforce by around 0.5% a year. This has helped support the economy’s ability to grow without pushing up wage growth and inflation ( my note - in other words, immigration is depressing wages in the United Kingdom).

Trade and manufacturing - It is highly probable that a favourable trade agreement would be reached after Brexit as there are advantages for both sides in continuing a close commercial arrangement.

Financial services and the City - The City would probably be hurt in the short term, but it would not spell disaster. The City’s competitive advantage is founded on more than just unfettered access to the single market.

Regulation, innovation and productivity - Brexit is only likely to have a limited impact on Britain’s productivity.

Foreign investment - Concerns about a drying up of foreign direct investment if Britain votes to leave the European Union are somewhat overblown.

Public sector - The British government could save about £10bn per year on its contributions to the European Union’s budget if the country left the bloc.

Consumption and property market - any negative impacts will be small, certainly at a macroeconomic level.

Overall - Although the impact of Brexit on the British economy is uncertain, we doubt that Britain’s long-term economic outlook hinges on it.

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