Tue. Apr 23rd, 2019

The Brexit has slowed down 3% to the British economy, according to S & P

El Brexit ha ralentizado un 3% a la economía británica, según S&P

The gross domestic producer (PIB) of the Kingdom
United has grown 3% less than what could have been since the referendum in 2016 favorable to Brexit, according to the estimates of the credit risk assessment agency S & P.

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The report indicates that the British economy has lost more than 66,000 million pounds sterling (77,300 million euros) and it is maintained that the biggest factor in the contraction of activity in the ten quarters since the vote was "the depreciation of the currency, which instigated an increase in inflation" "The result in the end was the erosion of the purchasing power of households and a reduction in demand," S & P says.


The price of the pound fell by 18%

In quarterly terms, the simulation of the risk rating agency estimates that the expansion of the GDP of the United Kingdom would have reached an average of 0.7%, above the 0.43% recorded. However, the report acknowledges that "it is impossible to be sure about how the economy would have behaved without the referendum", but insists that the study "offers a good indication of what could have been".

Immediately after the referendum, S & P notes that the price of the pound fell by 18%, signaling the collapse of the British currency as "the most relevant indicator of the impact of voting and ballast caused, through inflation, throughout the economy". This could be, he explains, because the goods exported by the United Kingdom have in themselves a high component of imported parts or because the bulk of British exports are services, less sensitive to prices than goods.


Inflation reached 3% at the end of 2017

National inflation reached a peak of 3% at the end of 2017, recalls the agency, although since then it has fallen and is currently at 1.8%. In the ten quarters that have elapsed since the vote, the inflation rate has been one percentage point higher than the one estimated in the case of the referendum not having taken place, thus burdening household consumption.

However, the rating agency highlights that domestic consumption has pulled the economy after the vote without offering signs of greater pessimism for the immediate future, which would have led families to save more, while households have resorted precisely to accumulated savings to mitigate the impact of rising prices.

British MPs await the results of one of the votes on Brexit in their Parliament

British MPs await the results of one of the votes on Brexit in their Parliament
(Ho / AFP)

However, despite this resilience, the authors of the report consider that household consumption would have been significantly higher in an alternative scenario in which the referendum had not taken place.

On the other hand, the agency stresses that the collapse of the pound, contrary to what might be expected, has not boosted the net exports of the United Kingdom, thus partially offsetting the rise in inflation, partly because the goods exported by the United Kingdom The United Kingdom includes a high percentage of imported components, which makes them more expensive to produce, in addition to the fact that the services, which are less sensitive to prices, account for most of the sales abroad of the British country.


The Government puts the growth at 1.4%

"Uncertainty about the form that Brexit will adopt has increasingly paralyzed future decisions, which has been reflected in the contraction of business investment in 2018," the authors of the report warn.

The US agency notes that the persistent uncertainty about the exit process of the European Union (EU) has also paralyzed business investment, especially in 2018. According to the latest data from the British Government, GDP grew by 1.4% in 2018, compared to 1.8% in 2017, and an expansion of 1.4% in 2020 and 1.6% in the next three years is expected, although everything will depend on how the Brexit ends.

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