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EРCУБOРNИOКMАY
Igor Davkov
The holds a PhD in the field of
monetary economics and finance
BREXIT
a lot can be lost,
and little can be
gained
T he outcome from the refer- The data about the last quarter from
endum which is supposed 2015 show that there is a reduction of
to take place in the United 2% in the investments and a decreas-
Kingdom on June 23 this ing trend of the intentions for invest-
year, whether the United ment of the entrepreneurs provided
Kingdom should leave the European with the results of some of the recent
Union, may have a high cost for the surveys for the business environment
economy of this country. Although in in the United Kingdom.
accordance with the last surveys, the
mood not to leave the EU has more If the citizens decide to leave the
prospects than the one to leave it, the EU, the uncertainty about the appear-
probability for such an outcome is still ance of the trade relations with the
high. Although at the moment when rest of the world in the short run will
this text will be published, the decision have important consequences on the
of the British people will be known al- performances of the economy. The
ready, still I consider that it is interest- price of the capital in the short run
ing to elaborate the essential effects is expected to increase as a result of
that are possible for the economy of the uncertainties related to the perfor-
this country, for its financial system mances of the economy. These uncer-
and beyond, of the financial system tainties are expected to affect higher
within the EU. The long-term effects risk premiums, as well as on the debt
in an event of a decision to leave the securities and shares, as well as a high-
EU will depend on the relations that er required yield of the government se-
will be established between the United curities. The exchange rate of the Brit-
Kingdom and the EU. ish pound (GBP) compared to the Euro
is already a collateral damage of this
The uncertainty related to the uncertainty. In the past 12 months,
outcome of the referendum already the value of the British pound depre-
showed specific negative implications ciated by more than 11% compared to
for the economy of the United King- the Euro. The analysts of the market
dom, taking into consideration that of currencies, if a decision is made
there is a restraint of the investors. to leave the EU, expect a sharp fall of
56 July-August 2016
