25 Jun 2016

Will the UK’s exit from the EU have a depressing effect on investment etc.

Excerpt  from  article by David Spencer, professor of economics and political economy, University of Leeds
The uncertainty surrounding the UK’s exit from the EU will have a depressing effect on investment, both domestic and foreign, and will inhibit growth. Recession remains a real possibility. This would be in line with the prediction of the majority of economists.
The reaction of the Bank of England will be important. It will face pressure to raise interest rates due to the inflationary threat from Brexit. Any rate rise would put further downward pressure on the economy.
The government’s stance will also be crucial. George Osborne, the chancellor of the exchequer, talked about an emergency budget in the event of Brexit. This would be the wrong course of action; more austerity at this stage will simply depress the economy and impose greater hardship on UK citizens. Osborne would do better to abandon his surplus target and to loosen fiscal policy. The task for the Labour Party is to promote an alternative (anti-austerity) economic policy that addresses the challenges of a post-Brexit economy.
One important message from the EU referendum is that a majority of the British electorate believe that economic policy and the economy is not delivering for them. Sadly, Brexit is not going to address people’s real concerns; instead, it is going to mean more hardship and pain.

S.W.T.Read. An Australians opinion.
The startling thing that has emerged episode from this is the divide between London and the rest of the country. A more inclusive and less ideology driven government is called for. The perception that London cares little for a large section of the community and the growing gap between the well off and THE REST is an elephant in the room. This rampaging elephant showed its head in this referendum and if no notice is taken future governments will pay a heavy price.

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