Among All Uncertainties After Brexit Vote, Low Growth Is Sure

British voters elected to leave the European Union, which in turn ushered in new leadership for the United Kingdom. But few are sure of the next step, and British leaders are wise to proceed cautiously before invoking Article 50 of the EU treaty and starting the process of negotiating a separation agreement. If agreement is not reached in two years, membership ends unless both parties approve an extension. British voters seek freedom from regulations and immigration requirements, but “The greater freedom UK negotiates will lessen access to the common market,” warns economist David Dapice. Consultants list options, but the bottom line is that the European Union has little reason to open its market to those who reject outright its standards and rules. About 44 percent of British exports head to the EU. Many costs and gains of Brexit– including new trade rules, foreign investment, inflation levels and status for British banks – won’t become apparent until negotiations begin and policy is set. That could take years, and in the meantime, uncertainty ensures lackluster growth.

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