The UK economy is gathering strength to take a record hit in regard to its national currency’s value with the approaching of Brexit. The British pound has already been reported to reach its lowest values for more than a year, but markets also expect greater devaluation.
The worst case scenario would be the one on which Britain exits the European Union without an agreement on future trade relations with the bloc.
The last drop of GBP was triggered by the British Minister of International Trade’s warning, Liam Fox, that less than eight months before the planned exit in March next year, there is 60 percent probability of Britain coming out without a deal.
In the absence of any convincing development in the direction of a conclusion of a deal in the coming months, the inertia of the British pound will be accelerated as the deadline is approaching and speculators will be tempted to play against the British currency.
Nevertheless, London hopes there will be financial discipline to withstand the separation. Unemployment during April-June period this year has fallen to 4.0 percent compared to 4.2 percent in the first quarter. This is the lowest level since the winter of 1975, when Prime Minister was Harold Wilson of the Labour Party. The number of employees in the labour market increased by 42 000 people and reached 32.39 million in the second quarter of this year. The number of unemployed has fallen by 65 000 to 1.36 million people.
Moreover, the British economy overtook the euro area on growth. The gross domestic product of UK has increased over the period April – June 2018 by 0.4 percent compared to the first quarter when it grew by 0.2 percent, justifying the average forecasts on the financial markets. In this way, the British economy has been able to exceed the growth of 0.3 percent of the euro area.
On the political stage, the question of Brexit still does not seem to be fully completed and most of the British people want a second referendum in the case of Brexit without a deal with the EU. Only 25 percent would leave the decision for the country’s future in the hands of lawmakers, a new “YouGov” study shows.
The poll also reveals that the attitude towards the British Prime Minister has also hardened since July, when 46 percent of people thought she should be replaced, if the government could not reach an agreement, while this month the percentage rose to 49.
