¶ … Brexit on United Kingdom (UK) economy
The June 23 Brexit vote has undoubtedly shaken the European policy, and impacted the UK economy in ways that are both known and yet to be unraveled. Amid the impacts of the Brexit vote, one sure thing is that the vote has led to significant uncertainty on the future of the European integration process (Fichtner et al., 301). Specific to the UK economy, the Brexit vote is expected to have both short-term and long-term effects. Soon after the vote, there was an increased uncertainty on the prospects of the UK. This considerable increase in uncertainty has been reflected in the rather unstable pound. This essay is based on the argument that, Brexit will harm the UK economy in the short-term but be beneficial in the long-term. Therefore, the essay focuses on the negative effects of Brexit to the UK economy in the short-term and the benefits in the long-term.
Negative effects in the short-term
As a result of the uncertainty that came with the Brexit vote, there was a flight in to assets that are deemed to be 'safe'. As a result of this flight, one and probably the first consequence of Brexit was an increase in price volatility on the financial markets. This began way before the Brexit vote as investors sought to 'insure' their properties through perceived safe assets. As of June, the volatility index of the London's FTSE 100 began to increase (Fichtner et al., 301), and analysts have attributed it to the significant uncertainty that came with Brexit. Immediately after the vote, there were heavy losses in stocks and as a result of these exchange rates, large banks were particularly hard hit. Large banks had their prospects in question because it was unclear the extent to which London's financial center would be able to profit from the free movement of capital within the EU economic zone after Brexit.
The second Brexit short-term effect was in the price of British government bonds...
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