Trou-Brexit
The United Kingdom-EU relationship lasted 47 years before things fell apart. If you don’t know already, Brexit, the common term for “British Exit”, was a decision by the British parliament to leave the European Union, creating a trade agreement. Many didn’t expect Brexit to occur, but British opinion changed in 2016, and here we are. Brexit allows for the UK to have free trade agreements with other countries like the United States, which wasn’t possible when they were with the EU, but the EU was a major trading partner too. The trade agreement went into effect on the first day of 2021, and we are starting to see some noticeable impacts.
The UK is struggling in the trade game right now, where others are not flourishing, but doing better. World trade was 4 percent higher in July, and even though rich economies were struggling a bit it hasn’t been to the magnitude of Britain. UK export volume was down 16 percent in July and imports were flat, and US exports were down only 7 percent while imports were up. Although there are a lot of variables, it’s clear that the UK is missing the 400 million consumers that it had in the European Union. Brexit didn’t prohibit the UK from trading with the EU, but it surely is a pain. There is so much paperwork and customs required to export to the EU, so businesses have essentially given up there. UK-EU trade has continuously fallen in the past few quarters, and this is blowing up the supply chain issues in the UK, more than what other large economies are facing. With countless examples of businesses that are struggling, it makes you wonder if Brexit really was the right decision. Do you believe that this is just a “now” problem or will it continue in the future?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
