Low growth will be a post-Brexit certainty

Medford

AS the dust settles after the emotional British break-up decision, the cost of leaving European Union turns out to be far higher than the benefits that it was expected to confer. The hope that Britain will gain greater freedom from the EU bureaucracy while retaining lucrative access to the pan-European market has turned out to be a chimera. The greater freedom that the UK negotiates will lessen access to the common market. Revisiting the question might allow the electorate to revoke its decision, but voters may not go along.

The negative consequence of Brexit is already evident in falling growth rate. The Economist Intelligence Unit (EIU) in January expected the UK's annual growth of gross domestic product (GDP) to average 1.9 per cent a year from 2017 to 2019. The EIU now expects zero growth, falling investment and rising debt/GDP levels. The UK, representing only about 3.5 per cent of global GDP, will have limited bargaining power in trade negotiations compared to the 20 per cent or so that the EU, including the UK, had in 2015. Many UK banks and financial services are likely to be constrained, their status reduced, as they no longer have the same access to the vast European market. Tighter migration controls - a major point of the Brexit vote - will further reduce the quality of the labour force without clever parsing of applications.