6 Brexit Economic Impact on Global Finances

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It is no news that the UK is still faced with negotiations with the EU that consists of 27 member states. The country is still locked in its decision to leave the European Union. It is quite evident that there lies uncertainty in the form a post-Brexit world will take.  Even now, the negotiating position is still open to debate with the country’s MPs split as to what the best approach to tackling it should be.

The big question remains: should the UK remain in the EU ?

The new course Brexit is taking is still unclear; there is no denying brexit economic impact will come strongly on the UK or the EU’s finances.

Let’s take a quick peek at the most likely economic effect of Brexit across the world, in six major areas.

  1. Supply chains and manufacturing

In the world today, the supply chains have become global, leading to an increase in the cost of raw materials under a new trade agreement. This not only affects the raw materials but also the currency exchange rates. Whichever direction Brexit takes, we are sure that it’s an achievement on the world’s economic data calendar . The country can also witness an increase in custom procedures for materials finding their way in or out of the UK for European countries; this might pull back the supply chain causing a reduction in efficiency and an increase in cost.

  1. Corporations
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Big and small corporations are shaking in their boots while thinking of the impact a separation will cause to their business. A lot of global bodies that have their headquarters in the United Kingdom are seriously considering what this move could mean for them once the country has separated from the EU. It is very clear that the move will have devastating financial consequences to their organization. For many, the cost of moving to a new premise and relocation expenses might just force them to shut down their business.

  1. Trade

Another brexit economic impact is on “trade”. The UK is constantly on the watch for new trade agreements worldwide to counter any changes in its trade with the 27 member states of the EU. One major government slogan has been “Britain is open for business” . This could mean that a lot of countries are in a good positions to mutually negotiate terms that will maximize profits and minimize exceptionally imports and exports tariffs.

  1. Exchange rates

You will remember that the value of sterling dropped by almost 10% the very moment the Brexit referendum results were announced. The British pound currency is most likely to remain weaker for a while against every world’s major currencies. A lot of its citizens are of the belief that this might help reduce higher tariffs that might make up new trade agreements.

What do you think?

  1. Taxes

The UK is very wise and understands the rules of economic power. It understands that it must be able to retain companies whose headquarters are with them while still attracting new ones to join them. So, there have been suggestions by financial experts that its level of corporation tax, which currently sits at 20%, be reduced to a lower rate of 15%. If this is fully implemented, UK would become one big country with the lowest rates in all parts of the world.

  1. Equity markets
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6 brexit economic impact on global finance

The Brexit vote affected both global equity volatility and the value of sterling. There are high hopes that these changes will become better as more is revealed about the world’s economy after ties are completely severed between the UK and the EU.

Every brexit economic impact on UK Finances is surprisingly amazing. The world is looking towards it but only after March 2019 that everyone will be able to fully understand its effect.

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