Now, there are a lot of theories and predictions about the effect of Brexit on the British Economics.
Well, prediction is particularly difficult if they try to foresee far distant future. It seems that a lot of views from economists are quite diverging.
But the pounds is falling after Brexit decision from the potential expectation for Britain to grow less as a single market.
Here are Few facts might be helpful for your trading and investment which departs from the fact derived from weakness of pounds.
According to purchasing power theory, the weakness of pounds imply few things:
Well, prediction is particularly difficult if they try to foresee far distant future. It seems that a lot of views from economists are quite diverging.
But the pounds is falling after Brexit decision from the potential expectation for Britain to grow less as a single market.
Here are Few facts might be helpful for your trading and investment which departs from the fact derived from weakness of pounds.
According to purchasing power theory, the weakness of pounds imply few things:
- anything in UK can be quite cheap for people outside UK. So this is good opportunity for people from outside UK to travel UK for cheaper foods and accommodation. On the other hands, British people will rather stay within UK for their summer holiday.
- Likewise, any goods exported from UK is cheaper than before. So some of the industry might take advantage of this weak pounds. For example, British shipping industry might enjoy for higher growth due to weak pounds.
- Investment originated from outside UK won't like to lose their value over period of time. Whether they are holding shares or property, they will likely to exit from British Market. This might cause serious damage to British financial markets if policy makers are not sensibly act on this.
Outside purchasing power theory, there are still few things to consider for investors.
- Giant international company in UK were there due to the fact they could do free trade with Europe. Now this is not possible any more because they will be subject to 10% import tax. So there can be a lot of pulling of international companies from UK. This is bad news for British Economic Growth. We can foresee possibly job loss.
- Britain will have control over border now. This will definitely help to stabilize some of the persistent immigration problem in Britain. Plus this might absorb some shock from point 1. But probably this will account for very small part of job markets.
- A weaker pound is also likely to push up petrol prices because oil is traded in dollars and Britain is a net importer. If the pound falls further, oil prices are likely to rise even more. This is bad news for overall British business and house hold.
Everything might sounds little negative through.
If someone could enlighten some positive effect of Brexit might be helpful for us think deeper in term of its factual consequence. In fact our next question is where the pounds can stop falling and rebound ?
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