The British economy is 2 per cent smaller, investment 4 per cent lower and consumption 1.7 per cent reduced than it would have been without a Brexit vote, according to research by Swiss multinational investment bank and financial services company UBS. Inflation is also 1.5 per cent above where it would have been, partly caused by higher costs of imports.
The real effective sterling exchange rate, or the value of the pound in terms of other currencies and relative to the price of goods, is 12 per cent depreciated, a top British newspaper reported citing the study.
Though the hit to gross domestic product (GDP) is higher than predicted by many at this stage, it is to be expected for some costs to begin before the United Kingdom officially leaves the European Union (EU), according to UBS.
As UK firms are likely facing a sharp increase in tariffs and non-tariff barriers, they may start hitting the brakes, i.e. scale back employment and investment decisions as uncertainty mounts, the study added. (DS)
Fibre2Fashion News Desk – India