Outlook of Brexit Effects

The article I read was on Bloomberg about the U.K. economy showing no signs of Brexit effect due to the rise inspending. Household spending rose about 0.7% from the second quarter and business investment grew 0.9% over the time frame per the Office of National Statistics. In a separate report was that retail sales grew at their fastest annual rate in more than a year in November, reasons being the holiday season coming up when consumer spending tends to increase. The Office for Budget Responsibility on Wednesday decreased their annual forecast to 1.4% down from 2.2% stating “uncertainty will lead firms to delay investment while the falling pound squeezes consumers by pushing up the cost of imports.” Alan Clarke of Scotiabank in London stated “In light of Brexit there was case for uncertainly holding back investment … However, things are never black and white. Projects to build planes, ships, buildings etc. will have been singed off 12-18 months ago, and that actively won’t shut off overnight.”

I found this article interesting due to the impact of the Brexit vote and the effects it has placed on the British economy. As the article mentioned there is a rise in the cost of imports which should lead the government with a couple options one being a decrease in an import tariff. This would allow consumers and business’ the ability to get cheaper products, as we have learned in class the taxing of a foreign monopolist can benefit the home country, the imports for Britain may not necessarily be a foreign monopolist and the reduction in tariff can benefit their country greatly.