Clear statement about why Brexit matters for the United Kingdom

More than anything, though, the precipitous drop [in the pound] seemed to attest to an increasingly unmistakable reality: Britain’s vote to exit the European Union — Brexit, in common parlance — has put its commercial relationships with the world on uncertain and potentially perilous ground. That poses risks for the British economy, making its money less attractive to hold.  “The world believes that the U.K. is going to be poorer in the future, and find it more expensive to trade,” said Paul Johnson, the director of the Institute for Fiscal Studies, an independent research institution in London. “Essentially, the world is betting against the pound.” And against the British economy. The immediate cause of the plunge appeared to be a speech by the French president, François Hollande, on Thursday evening in Paris, in which he endorsed the view that Britain must be forced to swallow unpalatable terms of departure to discourage other European Union members from eyeing the exits. “The U.K. has decided to do a Brexit, I believe even a hard Brexit,” Mr. Hollande said. “Well, then, we must go all the way through the U.K.’s willingness to leave the E.U. We have to have this firmness. “If not,” he continued, “we would jeopardize the fundamental principles of the E.U. Other countries would want to leave the E.U. to get the supposed advantages without the obligations.”

Source: For Britain’s ‘Brexit’ Bunch, the Party Just Ended – The New York Times

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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