Ostrum
  • News & Chronicles
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
  • About Philippe Waechter
Philippe Waechter's blog
  • Insights
  • About us
  • Expertise
  • Our people
  • Media

Philippe Waechter's blog
My french blog
  • News & Chronicles
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
  • About Philippe Waechter
  • News & Chronicles
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
Philippe Waechter's blog
Prévôté
Previous Next
  • 2 min

The cost of the Brexit for the UK

  • 30 April 2018
  • Philippe Waechter
  • Brexit
  • GDP
Total
0
Shares
0
0
0

After the referendum on June. 23, 2016, the British economy has followed a lower profile. This comes from changes in expectations: uncertainty about Brexit rules has created a wait and see behavior and opportunities in other countries have changed people and companies’ mind about investing in the UK.
Therefore the economic trend has changed. We can see that in the graph below. The trend from the start of the recovery in 2013 to the second quarter of 2016 has been extended to the first quarter of 2018. There is a widening gap between real GDP measured by the ONS and the pre-Brexit trend. It the cost of Brexit for the UK. We see a real change after the referendum.
After the low growth figure for the first quarter of 2018 (+0.1%), the picture is gloomier.
At least until the end of this year it will continue to increase because the agreement between the UK and the EU must be signed before the end of this year. After this date we will see but I think that the loss will be permanent as investment that has not be done since the referendum will never be done in the future. The gap will continue to widen. The sole possibility to converge to the previous trend would be the cancellation of the Brexit referendum.
ukbrexit.png
There is also an opportunity cost as there was a boom in European countries in 2017. To measure the disparity between UK and Europe, I have calculated the deviation from the 2013-2Q 2016 trend in France (we have data for the first quarter of 2018) and in the UK.
The analysis is clear: the opportunity cost for the UK is huge. France is 1.5% above its trend and the UK is 2% below. The UK has not taken advantage of the 2017 boom. As far as this picture is true, companies and investors will find advantage to invest in the EU rather than in the UK. This will accentuate the divergence between the EU and the UK at the expense of the British people.
fr-uk-deviation.png

Related Topics
  • Brexit
  • GDP
On the same topic
  • 1 min

British procrastination – a postponement will not guarantee an agreement

  • 9 April 2019
  • United Kingdom

Philippe Waechter

Theresa May is in Berlin and Paris to request a new deadline. It’s a safe bet that she will get some time. The date discussed is December 31, 2019. It…
  • Brexit
  • European Union
READ
  • 1 min

Another moment, Mr. Executioner

  • 14 March 2019
  • European Commission

Philippe Waechter

The British parliament is undecided. The vote on the possibility of a no deal is very divided. 321 against a no deal but 278 in favor of a lack of…
  • Brexit
  • Europe
  • United k
READ
  • 5 min

Euro area growth projections downgraded, and policy mix still restrictive – My weekly column

  • 13 March 2019
  • European Commission

Philippe Waechter

The OECD and the ECB have downgraded their 2019 growth projections for the euro area in quick succession, with the OECD now expecting 1% for the year ahead vs. 1.8%…
  • Brexit
  • No Deal
READ
Subscribe to the newsletter

All the news from Philippe Waechter’s blog in your mailbox

Loading
ABOUT PHILIPPE WAECHTER

Ostrum's expert magazine

ABOUT OSTRUM AM
  • About us
  • Media room
  • Our publications
FOLLOW ME ON
EXTERNAL LINKS
  • Economists
  • Think tank
  • Central banks
  • Blog roll
©Ostrum AM 2019
An affiliate of : Plan de travail 2

Input your search keywords and press Enter.