Dubai – MENA Herald: A fall in investment and the exchange rate are both highly likely once Article 50 is triggered in March 2017, according to Richard Portes, Professor of Economics, London Business School.
Speaking at the Conservative party conference earlier this month, British Prime Minister Theresa May stated that Britain will no longer be a member of the single market under Brexit. Though scope will be given to trade inside it, the Prime Minister said.
“The Prime Minister’s speech stressed ‘sovereignty’ and ‘independence’. That means limits on immigration by citizens of the EU27, no Single Market, no European Court of Justice jurisdiction to adjudicate its rules, and no ‘passporting’ for financial services,” Portes explains.
“We might negotiate membership of a customs union with the EU27, but we would then have no control over our trade agreements with countries with which the EU has concluded trade deals.
“The ‘Great Repeal Bill’ promised for spring 2017 will not be a ‘bonfire of regulations’ – the Prime Minister said that all existing UK law based on EU law will remain in force unless specifically repealed (though she did not say whether such repeals would come in the form of legislation through Parliament or statutory instruments issued by the executive). All this does little to resolve the uncertainties facing UK business, foreign investors, and EU27 workers in the UK (and their employers).
“The result will be a massive negative shock to the British economy. We can expect to see further exchange-rate depreciation and a fall in investment. There is no evidence yet that senior ministers understand the magnitude of the tasks facing them, the inadequacies of their resources to deal with them, and the time and governmental attention the process will take. Nor do they have a realistic view of the intentions of EU27 governments for the negotiations to come.”
The slow-motion train wreck has just accelerated, Portes says.