What Brexit could mean for the US economy Published Moments Ago Key Points After three long years of negotiations and the possibility of a no-deal Brexit is rising every day. Economists have predicted what it could all mean for the U.S. economy and its financial markets when the U.K. does finally leave the EU. A current leadership race to succeed Prime Minister Theresa May has largely put Brexit on hold. After three long years of negotiations and the possibility of a no-deal Brexit rising every day, economists have predicted what it could all mean for the U.S. economy and its financial markets when the U.K. does finally leave the EU.
The effect Brexit will have on the U.S. economy, let alone the U.K. ‘s largest single-country trading partner. ‘s new prime minister would take the country out of the EU without a deal in place, rather than Parliament finally approving some sort of formal deal. Some Brexiteers have insisted that the U.K. must now leave the EU come what may on October 31 and believe a «no deal» Brexit is preferable than a potentially interminable alliance with the EU that resembles partial membership. U.S. trade deficits with any given country are a bugbear of President Donald Trump and his trade and tariff disputes with China and the EU have reflected this.
The U.K. has largely escaped Trump’s wrath, however, as the U.S. has a trade surplus with the U.K. President Donald Trump attends a Ceremonial Welcome at Buckingham Palace on June 03, 2019 in London, England. Capital Economics’ Hunter believed that the U.S. really doesn’t have that much to gain or lose from a disorderly Brexit, or even a trade deal, given that U.S. exports only account for 0.7% of U.S. gross domestic product . «There may well be an attempt on the U.K. side at least to foster a closer economic relationship with the U.S. to make up for the loss of ties with the EU, and a comprehensive U.S. -U.K. trade deal would have the potential to provide a modest boost to both economies,» he said. «But in the case of the U.S. that boost really would be pretty miniscule.
The U.S. administration wants any deal to include significant access to the U.K. agriculture sector and possibly even the NHS, both of which are surely political non-starters from the U.K. government’s perspective,» he added. «-U.K. trade deal,’ what I hear the president say is ‘America first’,» he said Monday. «Many business leaders dread a «no deal» cliff-edge scenario for the U.K., as it would mean that the country abruptly leaves with no transition period in place which would allow businesses to adjust to life outside the EU. » It would cause market volatility too, economists note.
Most economists agree that it’s hard to quantify the exact impact of a «no deal» Brexit as it would be an unprecedented, uncertain scenario. «There are basically no precedents we can identify for a shock of this sort acting across sectors simultaneously,» he said. Meanwhile IHS’ Dan Yergin noted that «if Brexit turns out to be a bigger shock to the U.K. economy and the European economy then the reverberations will be felt in the U.S». «Indeed, we are seeing examples of consumers moving away from premium brands to cheaper alternatives due to the squeeze on household spending power. »
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