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Brexit already costs the UK massively. The pound dropped from $1.50 per pound in 2015 to $1.25 per pound in 2018. That is almost 20% destruction of wealth. htt
by fxj 7y ago
Brexit already costs the UK massively. The pound dropped from $1.50 per pound in 2015 to $1.25 per pound in 2018. That is almost 20% destruction of wealth.
https://qz.com/1626291/the-british-pound-is-on-a-record-losing-streak-against-the-euro/ https://qz.com/1626291/the-british-pound-is-on-a-record-losi...
- soVeryTired 7y agoI don't think currency movements create or destroy wealth: at most, they just shift it around. I could just as easily argue that the drop in the pound created wealth among the UK's trading partners. What a drop in FX rate does result in is a (possibly minor, possibly major) uptick in inflation as imports become more expensive. It also makes the country's exports more competitive since they're cheaper in relative terms. Some countries actually see a low FX rate as desirable: reduction in the exchange rate is arguably one of the channels that made QE an effective policy.
- fxj 7y agoOf course it always depends on the perspective: For a fisher man who wants to export seafood to the EU this is good news. For the average family which has to pay 20% more for everyday goods like vegetables from the Netherlands, not so much. However, Britain has a large trade deficit in goods and services, so in total it is bad news.
- ProxCoques 7y agoAlso note that UK exporters have tended to bank the price difference rather than increase sales. Not good for increased employment. https://www.theguardian.com/business/2017/sep/15/uk-exporters-have-hoarded-gains-from-fall-in-sterling-says-ons https://www.theguardian.com/business/2017/sep/15/uk-exporter...
- tim333 7y agoIt's been a mixed bag. I'm not sure exchange rates matter that much. In terms of GDP its not what it would have been "Brexit had cost the world’s fifth largest economy nearly 2.5 percent of GDP at the end of last year, compared to its growth path prior to the mid-2016 vote on exiting the bloc." But at least we still grew a little and "UK unemployment falls to 44-year low despite Brexit fears" https://uk.reuters.com/article/uk-britain-eu-goldmansachs/brexit-uncertainty-has-cost-britain-600-million-a-week-goldman-sachs-idUKKCN1RD1T8 https://uk.reuters.com/article/uk-britain-eu-goldmansachs/br... https://www.theguardian.com/business/2019/mar/19/uk-unemployment-falls-brexit-jobless-rate https://www.theguardian.com/business/2019/mar/19/uk-unemploy...
- ankushnarula 7y agoThe UK has been destroying its own wealth far prior to 2015. https://tradingeconomics.com/united-kingdom/government-debt-to-gdp https://tradingeconomics.com/united-kingdom/government-debt-...