Uncertainty is certainly looming large over the UK economy because one way or other Brexit effect will surely leave its impact Pound Sterling. The immediate fall-out of Brexit decision was the Pound’s 12% dip against the US dollar. It may take at least half a year more before British Pound will stand in parity with the US dollar.
A couple of months back, the exchange rate of Sterling Pound dropped to $1.33 against 1 US Dollar. This clearly reflects that Brexit impact is not over as yet. Investors will have to invest carefully during this period. Even after the Brexit decision, the UK will have two years more time up to 2019 to leave the Brexit by following all legal requirements and formalities necessary for the purpose.
David Cameron, after stepping down as Prime Minister of the UK, has left it upon his successor to change Article 50 of the Lisbon Treaty that governs how nations could exit the bloc. If the UK decides to leave the single market all at once, then it may need to manage Free Trade Agreements with other nations independently, which could take more time to create favorable investment scenario inside the UK. The next two to three years time will be crucial for the UK economy.
The British Member of Parliament (MP) George Osborne said, “We think investors should be prepared for the risk of [pound] weakness extending quite significantly in the next few months, while uncertainty surrounding how the U.K. moves forward persists.”
Gloomy Pictures After Brexit Referendum
No matter, how hopeful the Britons and economists are over the Brexit decision in the long run, the UK PMI data for construction and tertiary sector have disclosed much lower figure and estimate than what was expected. Investor’s confidence is at its all time low now.
Even OECD (The Organisation for Economic Co-operation and Development) has warned that UK will have to exercise uttermost caution while implementing its economic policies or else it will fall into the deep trap of recession.
Investment Climate of UK in 2017
If current days are taken into consideration then the future of the UK economy in the early 2017 is not going to be that much good. Not just investors are confused, even FDIs into the Great Britain are coming intermittently. Also, a recent official figure has quoted that investment fell at a rate of around 0.4% in the first quarter of 2016.
The value of currency has to be watched with uttermost caution. If the exchange rate of the pound falls below $1.30 level, it could be alarming for the entire economy. That’s what happened in mid 1980s, following which recession engulfed the entire state. However, these are only predictions. Some economists feel that brighter days are ahead for the UK.
They are sure that pound will be able to recover soon in the next few months hence a hopeful New Year can be expected. With a strong and experienced leader like Theresa May at the helm as the Prime Minister of the state, there is no doubt that UK economy will come back strongly in the New Year.