What are the challenges Britain is currently facing with regards to Brexit?
Ever since Britain decided to vote itself out of the European Union, the economy has taken its toll. Inflation is at an all-time high, consumer spending is rapidly decreasing and banks are unable to make decisions without ruining the economy, and businesses are faced with uncertainty and are unable to plan long term. The above issues will now be discussed in detail.
According to Allen & Scruton (2017), since the Brexit vote, inflation has risen more than expected. This is due to the decrease in the pound against the dollar and the euro. Although the increase is seen as moderate, households who were virtually unaffected by inflation in the past will be impacted. Martin (2017) states that inflation was at a high of 2.9% in May and decreased to 2.6% in June. This was seen as a shock to Britain as inflation was expected to remain at 2.9%. The reason inflation decreased by 3% was due to the lower cost of fuel, and the decrease in global oil prices (Martin, 2017). As of September 2017 the current inflation rate of Great Britain is 2.97%. Analysts predicted that the CPI would reach 2.82% in the fourth quarter of 2017, but in June 2017 the CPI was already above the estimated number. As listed above there are a number of reasons as to why inflation increased. Martin (2017) states that the pound decreasing and the UK’s decision to leave the European Union led to higher cost of imports thus giving rise to higher inflation.
According to Martin (2017), inflation has impacted the British consumer spending power. The rise in prices coupled with little to no difference in wage growth has decreased consumer spending power. Consumers are reluctant to spend money due to the fact that prices are increasing daily. It is anticipated that the situation will not differ because inflation will continue to rise and wage growth will remain weak. According to Martin (2017), there are many examples as to how consumer spending is decelerating. One of those being the purchasing of new cars, consumers are reluctant to purchase new cars because of the price involved in maintaining the car over the years. The number of new cars that are...