In World Economy News 28/06/2016
IHS Global Insight Economist Howard Archer said he believes that the vote to leave the EU is bad news for the UK economy, certainly in the near- and medium-term.
In the referendum held on June 23, 52 percent Britons voted to leave the EU. UK Prime Minister David Cameron announced his resignation earlier on Friday.
Archer observed that economic uncertainties relate not only to what will happen after the U.K. leaves the EU, but also to when exactly the divorce will occur.
The more messy and antagonistic the negotiations with the EU prove (particularly over new trade agreements and access to the European single market), the more the UK economy is likely to suffer during 2016-2018, Archer noted.
Elsewhere, Ruth Miller, a UK economist at Capital Economics, said while triggering Article 50 of Lisbon Treaty seems the most likely next step, it is not clear when the starting gun will be fired.
Once the process has begun, though, it will become more difficult for the UK to change its mind, renegotiate its status in the EU, or even to hold another referendum on the withdrawal terms, Miller noted.
According to economists at ING Bank NV, the economic and political implications are likely to be greater for the UK and Europe with years of uncertainty ahead.
The key question will be whether the UK can achieve an amicable divorce from the EU, which will limit the economic pain, or whether it will break down in acrimony, the firm said.
Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, said the ‘Brexit’ shock has unleashed a wave of economic and political uncertainty that likely will drive the U.K. into recession. He noted that monetary easing from the Bank of England is not a foregone conclusion.
Source: RTT News
