Brexit costs $ 1 billion a week to the British economy

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The Brexit has been delayed and could possibly be canceled. But that has already done a lot of damage to the British economy.

the vote leaving the European Union in June 2016 has significantly weakened the pound and has paved the way for years of uncertainty that have reduced economic activity and resulted in a collapse of investments.

The economy is now 2% smaller than it would have been if the UK had chosen to stay in the bloc, according to the Bank of England. The economic output lost since the referendum is about 800 million pounds ($ 1 billion) a week, or 4.7 million pounds ($ 6 million) an hour.

The economic consequences have multiplied despite the absence of structural change in Britain's trade relations with the countries of the European Union or the rest of the world.

Britain continued to sell goods and services to the European Union, its main trading partner, while politicians used to negotiate a divorce. It has been easy for UK companies to hire EU workers and maintain supply chains that cross national boundaries.

Yet, for nearly three years, the conditions of future British trade are unclear, preventing companies from planning their future. Investments have been delayed or canceled and many companies have invested millions of dollars in planning the worst possible scenario: a messy Brexit.

With British policy in disarray, the country risks leaving the European Union without a transitional agreement to protect trade. The Bank of England said the consequences of this scenario would be worse than those of the 2008 financial crisis.

The big slowdown of Brexit

The UK was the fastest growing G7 economy when voters went to the polls in 2016. Emergency measures taken by the Bank of England helped its economy to avoid the recession, which, according to some, would be followed by a vote in favor of Brexit, and unemployment remains very low.

But the country has always fallen to the bottom of the G7 rankings. Economic growth has gone from an annual rate of about 2% to less than 1% now.

British business investment stagnated after the referendum and then plunged 3.7% in 2018. Meanwhile, the rest of the G7 has seen business investment grow about 6% a year since the vote.

And British business confidence has collapsed at the lowest level for almost a decade.

"The reason for this underperformance compared to the rest of the world is, I believe, the uncertainty surrounding the Brexit prospect," said Gertjan Vlieghe, member of the Bank of England's Monetary Policy Committee. , last month.

The pain was also felt by households. The British pound plunged 15% against the dollar after the 2016 vote, pushing the price of imported products up. This has boosted inflation and contributed to a decline in the value of people's paychecks.

Trauma of the company

Leaders reacted to uncertainty by attempting to put their business behind Brexit.

"It is clear that political inaction has already had economic consequences.Many companies have held back investment and recruitment decisions because of lingering uncertainty," said Adam Marshall, director General of the British Chambers of Commerce, Economic Pressure Group.

Many banks have opened new offices in Germany, France, Ireland and other EU countries to protect their regional activities after Brexit. Financial services companies must also move large badets to satisfy European regulators. Strengths of at least 1 trillion pounds ($ 1.3 trillion) leave the country, according to the EY council.

Sony (SNE) And Panasonic (PCRFF) Are the two moves its European headquarters to the Netherlands.

Manufacturing companies, whose supply chains need to operate transparently, have also made changes. Nissan (NSANF) at abandoned plans to build a new model in the UK, citing uncertainty about Brexit. German engineering group Schaeffler (SCFLF) Farm two of its three plants in Britain for the same reason.

The biggest risk

The most dangerous scenario – a messy Brexit – could still happen.

European leaders on Thursday gave Britain a brief deadline for Brexit, but the country could still pull out of the bloc if the UK legislature did not decide on a way forward.

Senior Confederation of British Industry and Trade union officials said on Thursday that Britain was facing a "national emergency" if politicians allowed it.

"Businesses and communities in the UK are not ready for this, and the shock of our economy would be felt for future generations," they wrote in a letter to May.

McDonald's (MCD) and KFC (YUM) have partnered with British supermarkets to warn that the exit of the European Union would disrupt supply. Airbus said it would be forced to redirect its future investments out of the UK.