The value of the pound is depreciating as you can see from the chart above, the prices of houses within the UK is falling. This isn’t due to the high supply; however, it is due to the outcome of the referendum as people are not buying houses as no one knows what other drawbacks are going to be because of the UK leaving. Citizens of the UK are not buying houses at this current time because they are considering whether it would be the best decision to make an investment in a house and stay in the UK or move abroad depending on what other consequences we are going to have to face because of the vote to exit the EU. As the decision was made by the UK to leave, there has been a “0.4%” increase in the inflation rates as you can see in the graphs below (Statistics, 2016a). As the pound fell, the demand for goods and services increased because when the pound is converted into different currencies, the value of the pound worked out cheaper for other countries to purchase. Therefore, this was taken as an advantage as they would be able to buy more for the price they pay now in comparison to before. As mentioned, the demand has increased so the prices of goods and services have also increased too which has a similar effect on tourism. This has had a positive effect on our economy as the employment rate figures have gone down as the more tourism we get the more jobs there are to keep up with demand.
(Ferreira, 2016)
Another impact on the economy due to Brexit is the inflation in pricing on trading. The independent movement of Britain deciding to leave the EU both will have benefits and drawbacks, as would if the decision was for Britain to stay in the EU. The implication of this decision on trading is currently taking place, it can either work in favour for Britain or it can be a decision the voters regret.
The key countries which the UK sells to within the EU are Germany, Holland, France and Ireland, which all combine to export a total of “£91.43bn” (Foster and Kirkup, 2016) annually. However, this is estimated to increase due to the introduction of tariffs, which concludes an increase in price for all those exporting goods and services. A professional economist, John Springford, has estimated that the tariffs would approximate between “2.2%-9% of GDP, costing an additional funds of £40bn.The tariffs will range from 32% on wine, 4.1% on liquefied natural gas, 9.8% on car items and wheat products ranging to 12.8%.” (Foster and Kirkup, 2016) However the biggest threat to the UK may not come from the introduction of tariffs, but from the threat from the EU implementing new regulations. If this is the case, Britain will have to find new ways in which they can work around any new rules and regulations, which could ultimately lead to an increase in pricing to export, causing a domino effect where the people of Britain are having to pay more for goods and services as the inflation rates have increased since the referendum by “0.4%” (Statistics, 2016a).
