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Finance and Brexit: what changes?

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Chloé Le Cornic

Within a few years, the United Kingdom should have left the European Union for good. Visa, offshoring, job cuts ... Await the British. While many speak of the far-off post-Brexit consequences, it should be noted that the outcome of the referendum already impacts and / or will very soon impact the financial health of the country. Really? How? Focus.

Finance and Brexit: the consequences

A mini-financial crisis is taking place in the country as we write these lines. The stock exchanges continue to fluctuate all over the world. If it is undeniable that the Brexit will have an effect on the British's daily life, the fifth leading world economic power leaving Europe will, of course, have an impact on the rest of the planet. The current fluctuations of stock prices is the beginning of it all. Tokyo and Hong Kong stock exchanges dropped a week ago, in the same way as London's, which dropped by 7% the same day. Investors are turning to gold: a safe bet.

Years of negotiations in perspective. The United Kingdom has moved hand in hand with Europe for 43 years. Over time, the two partners have signed numerous trade agreements: agreements that will have to be negotiated to save most of the two parties interests. New trade arrangements will have to be found. Until then, exporters will sail in troubled waters, not knowing which way the wind is blowing. Economic instability is becoming more and more present. Moreover, in view of the large number of trade agreements to be reviewed, negotiations could last ten years.

Finance and Brexit: what changes?

Towards a loss of income. Experts are formal: if the country succeeded in negotiating a free trade agreement, similar to Canada's one, the British would lose, on average, 4,300 pounds of income per year. GDP would also be impacted. By 2030, experts expect it to be 6% lower than it would have been if the United Kingdom had not jumped European ship.

Custom tax rise. It is quite certain that the Brexit will have an impact on the business of British exporters. Customs charges could be increased significantly. According to specialists, customs duties could cost an additional 5.6 billion pounds per year to exporting companies. Enough to restrain the business of these firms. Another consequence: The companies concerned by these taxes may well decide to leave the country and settle elsewhere. Another important loss for the country.

A decrease of investors. Many companies have already packed their bags. Yes, the Brexit has scared a lot of companies. Many of them had set up their headquarters in the capital. The referendum led firms such as JPMorgan, a US bank employing nearly 16,000 employees, to consider moving between 1,000 and 4,000 jobs outside the country. Note that Chinese and US investors are currently struggling to invest in the country.

An increase in unemployment. Fewer tourists (visa need), investors, more commercial brakes, relocations ... Yes, all this announces an increase in unemployment. According to statistics, unemployment is expected to rise from 5.3% in 2017 to 6.5% by 2019. The Brexit would cause the loss of 950,000 jobs over the next three years. The financial sector would be particularly affected.

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