Page 49 - Banking Finance March 2023

ARTICLE

After triggering Article 50 on 4 April, 2017 (2 year The net flow of Foreign Direct Investment (FDI) was high in
countdown for Brexit), the growth rate of GDP has gone 2016 but failed to maintain the momentum. Despite a
down from 2.4% to 1.70% and 1.60% as of 2017, 2018 & massive fall in 2017, there was no bounce back and the
2019 respectively despite normal economic situation in the declining trend continued.
world at that time, GDP growth slumped by 29.17% in 2018.

Source: Data extracted from Office of National Statistics

While analyzing the aforementioned graphical
representations, it is evident that there is no sudden change
Source: Data extracted from Office of National Statistics in economic situation although the slower outcome of the
previous decision. Brexit was a slow puncture of the
The GDP during 1st Quarter of 2017 was 537114 which economy, later hidden by the Pandemic and Ukraine war.
increased to 546515 in Q1 of 2020 that means that the
accumulated growth during 3 years (Q1 2017- Q1 2020) was The referendum for Brexit was done on 23 June, 2016 when
just 1.75%. Thereafter, the GDP plunged due to nationwide the majority of people voted to leave the European Union
lockdown on 23 March 2020 by the PM Boris Johnson to (EU). On 29 April, 2017 invocation of Article 50 (exit process
control the pandemic. Let's be a little conservative as the from EU) and beginning of 2 years of withdrawal notificaton.
comparison period faced 9 days of lockdown period in March On 14 March 2019, extension of article 50 was sought. On
2020. The GDP was down by 0.02 during the last quarter of 21 March 2019 the EU permitted the extension. On 28
2019 while there was no pandemic at that time. October 2019 further extension was granted till 31 January
2020. On 12 December 2020 Boris Johnson won the election
The Brexit refrendum was held on 23 June, 2016 and at that and reaffirmed Brexit by 31 January 2020. On 31 January
time the GBP value against USD was 1.4209, this value has 2020, the UK entered a transition period to leave the EU.
not been touched since then. However, there has been Finally, on 31 December 2020, the UK left the single custom
range bound valuation but the positive outcome of Brexit is union and market of the EU.
not reflected in currency value.
A huge single market and custom union of 27 countries also
got out of hand. It became extremely difficult for businesses
in the UK to comply with the rules & regulations of the
existing EU. The single EU rules have now been converted
into 27 borders which hampered the trade efficiency and
cost effectiveness. The transportation of goods which used
to take 1 day have turned into 1 week due to separate
licenses and clearances with EU countries have made export
unviable. The companies from the EU are reluctant to visit
the UK counter in trade shows. There is a manpower crisis
Source: Data extracted from Office of National Statistics in the area of hospitality, construction, agriculture etc.

BANKING FINANCE | MARCH | 2023 | 43