During the last few years, many were shocked when the news of Great Britain exiting the European Union (EU) hit the headlines. People all over the World, especially the investors and business owners expressed their deep concern and asked the British government to reconsider the decision, as it can affect the businesses and the economic growth of the country. Has the time already come?

Uncertainty looms in as to what will happen if the British government continue their Brexit Move

After the news exploded, the British pound plummeted to its lowest level a few days after because foreign investors have started pulling out their stocks from the British market. Business owners became dreadful how the Brexit will affect their operations, especially for those who export and import their products around Europe. Before, these UK businesses enjoyed unified tax fees (and sometimes exemption) under the jurisdiction of EU.

ONS Explained United Kingdom’s Declining Economy

But now that the United Kingdom wants to exit EU, they fear that it’ll be the end of their businesses when they have to deal with paying a hefty amount of tax fees per exportation or importation. Because of these uncertainties, it was quite expected that the UK Economy had slowed down. And just this year, it hit its weakest point in the past five years.

UK Economy Falls Back Further Than Other Major Economies In Europe

Uk’s Economy Slowed Down From The Year 2017

During the last quarter of the year 2017, the Office for National Statistics reported that the economic growth of the country plummeted down to 0.4%, which was lower than their 0.5% earlier estimate. They also stated that a major factor of the slow economic rate was because of the Brexit. Moreover, the UK’s production last year was significantly lower because the spending power of consumers declined due to the price increases. Furthermore, it also decreased their purchasing power overseas because of the sharp decline of the British pound in the foreign exchange following the Brexit move.

United Kingdom’s GDP Growth Also Decreased

The country’s growth domestic product performance during the last quarter of 2017 declined from 1.8& to 1.7% and was considered to be the weakest performance during the last 5 years, while the other European economies like Germany grew over 2.2%. Meanwhile, the French economy increased with its GDP up to 1.9% and the United States earned the third spot by 2.3%.

UK’s GDP Rates Drops for the Last Quarter of 2017

This is a bad news for the United Kingdom, especially since the country relies heavily on consumer spending to stabilize its economic growth since the financial crisis in 2009. However, the Brexit movement increases the consumers’ reluctance to spend money because their purchasing power raised as the inflation rate got higher and outpaced the current wage growth.

In fact, the household spending of the country only grew by 0.3% compared to the 1.8% spending rate in the first quarter of 2017. This was also the slowest rate of spending power and growth since 2012. Aside from the consumers itself, the business firms are also hesitant to spend because of the same sentiments above. Since the Brexit, the business investment rate had remained flat and is starting to show a declining growth at the start of 2018.

This created a domino effect with the sudden rise of unemployment during the first quarter of 2018.

This projected weak data creates a dilemma for the Bank of England on how to determine the direction of interest rates and changes it’ll apply to the policymakers. They feared that the consumers and business firms will diminish its purchasing power further if the bank will issue higher interest rates this upcoming May 2018.

Bank of England Releases a Statement Regarding UK’s Growth Rate

If this continues, more business firms and foreign investors are now anxious that it may lead to UK’s ultimate downfall. One of the most powerful countries in the world may lose its glory and zenith should they fail to recover from these losses. That is why the British citizens, as well as the foreign investors, are appealing to the government to reconsider their decision.

Even the European Union itself had conducted some high-level diplomatic mission to talk with the United Kingdom in order to achieve a peaceful solution before the British government files its official exit from the said organization.