Britain held a referendum last year in which its inhabitants voted to leave the EU. Since then, there have been several news publications debating the topic in various forms. Brexit is leaving Britons weaker and meaner, according to The Economist. To put it succinctly, the pound and the rage are three of the effects of these. The below are five main themes that can be described from the news article:
This was the term used to describe the mechanism by which the United Kingdom will leave the European Union. It is an interesting and perplexing time for companies operating both domestically and abroad in relation to Britain. In respect to this, the Economist explains that the country is in a good position given the opportunities the move will allow for but at the same time, it has some issue to deal with, which is not so good.
Based on the analysis of the paper, this is more of an anti-global concept that is coming from the move Britain is looking to make. According to the Economist, Brexit is somehow enforcing a move to restrict the free flow of economic processes. This is the exact opposite of globalization that is currently being embraced throughout. There is the understanding that through Brexit, the country will lose some competitive advantage more so in terms of supply chains in the international market.
III. Economic markets
There is also the topic of economic markets and how they are going to be impacted by the Brexit. Basically, the news article brings to light how it is not only difficult and beneficial for Britain to be a single market but how this new strategy will impact on its neighbors. More so in particular how manufacturing industries will be affected as Britain leaves the European Union.
The above circular flow diagram best illustrates the relationship between household items and firms within an economy. This is the same concept for the EU market that Britain wants to leave. By doing the latter, the exits have the potential of distrusting the flow of production and consumption of goods and services for all involved in the EU market. Therefore as the article emphasize, it is not only Britain who will feel the difficulty in the process but others as well.
IV. Financial Growth
This is one topic that is majorly discussed throughout the article. It is the opinion of the Economist that through Brexit, the country’s currency is going to be affected tremendously. As a matter of fact, the eve of voting saw the pound stand against the dollar at $1.48 but later on it was at $1.22, a 16% drop (the Economist). However, there is good news in that investors will still be interested in some avenues of the country’s economy such as the government bonds and real estate (the Economist). As such, there appears to be some light at the end of the tunnel for Britain.
(Finance & Economics)
This is a simple example of a production possibilities Frontier that is often used to show how a specific component of the economy is likely to perform given specific market conditions. It best represents the possibilities that the Sterling pound in addition to Britain’s other investment opportunities will be affected by the Brexit. As such, it makes an analysis of what the future might look like for the financial growth of the country.
V. Self Reliance
From the news article, this is a topic which pertains to Britain’s ability to control its borders as effectively as possible. The Economists argue that the one benefit Brexit guarantees are the opportunity for self-reliance. This means more border control for security, migration controls and conservation of their Englishness; thus to some extend retaining more jobs locally and preserving their culture. This will mean a shift in its demand curve for various goods and services with respect to the exit.
(Experimental Economics Center)
The demand curve, as shown above, is a simple representation of the domestic demand for Britain now and after the exit. Just like most aggregate demands, it is a curve to show the relationship between price and goods demanded. With the Brexit, there is uncertainty over the pricing and demand for specific products either, manufactured within Britain or outsources. As such, this graph is a representation of what the article discusses in tune of the country becoming self-reliant thus various aspects of its businesses changing.
Before the talks of Brexit, Britain has over the years been one of the key players in the European Union. However, when the referendum was called for the people to decide whether they wanted to leave or stay, they choose the previous. Those who are for Brexit argue that it will be good for economic sense while those who are against it, think it will be the downfall of Britain as an economic power. The European Union can be considered to be more of a single market for its member countries to freely interact. It is governed by a set of rules that discuss the manner in which member countries are in a position to conduct business between each other. It even has its own currency, the Euro. The problem, in respect to those who are pro-Brexit, is that the current arrangement is not as beneficial to the businesses in Britain as it should be. Those who voted for the exit claim that even their local jobs were being taken away from them in addition to business opportunities being drained. Given the circumstances, Britons voted overwhelmingly to leave the EU but this has since caused some economic problems more so for the value of its Sterling Pound. This far, there are only speculations of how the country’s economy is likely to dwindle further down one article 50 is triggered and the country finally leaves the EU.
Experimental Economics Center. “Aggregate Demand.” Experimental Economics Center, 2016. Web 12 May 2017 http://www.econport.org/content/handbook/ADandS/AD.html
Finance & Economics. “Production possibility curve & Law of Increasing Opportunity Costs. Finance & Economics, 23 Apr 2017, Web 12 May 2017 https://justdan93.wordpress.com/2012/04/23/production-possibilities-curve-and-law-of-increasing-opportunity-cost/
Freiling, Nicholas. “DeLong’s ‘Circular Flow’ Falls Flat.” Hans Economics. 2 Jan 2012, web 12 May 2017 http://hanseconomics.com/2012/01/02/delongs-circular-flow-falls-flat/
The Economist. “Brexit is making Britons poorer, and meaner: The pound and the fury.” The Economist, 11 Oct 2016. Web 12 May 2017 http://www.economist.com/blogs/freeexchange/2016/10/pound-and-fury
Type your email