Brexit has been one of the most controversial decisions that has been passed for many years. The reason for this is that historically speaking, the United Kingdom had very close cultural and commercial ties to continental Europe. For this reason, they have developed a very strong economy that has thrived over the years.

What the United Kingdom has lost sight of is the fact that their country does not have infinite resources due to its small size, which is precisely why they need to have active trading partnerships with their neighbors. Being a member of the European Union allowed them to use those trading partnerships to their advantage; however, now with Brexit, the fiscal budget has to be pulled from other beneficial programs to British society in order to make up for the substantial loss faced with the trading partnerships. As a result, the quality of life in the United Kingdom will likely decrease a great deal in the coming years, particularly for those who were barely getting by as it was.

The Issues That Local Importers Face

Many of the issues that will be faced by the local importers will be related to pricing. The reason for this is that the European Union and the United Kingdom previously had an agreement under Article 50 of the Lisbon Treaty that they have two years to renegotiate trade deals upon deciding to leave the European Union.

Below is the Guardian take on the trade affairs from June 26, just days after the brexit, which still seems relevant today:

“Will a post-Brexit UK need a new trade deal with the European Union?
Yes. Once the UK’s formal decision to leave the EU is notified to the European council of EU leaders, under article 50 of the Lisbon treaty, the UK will be giving formal notice that it will be leaving the EU. Article 50 sets a two-year window to renegotiate a new legal basis for Britain’s trade relationship with the EU – although it also allows for an extension.”

From: here

Where this has an impact on local importers is that there were previously no quotas or tariffs on goods that moved between the United Kingdom and Europe. For this reason, local importers have the potential to face a major increase in taxation on tariffs of goods from Europe, which could dramatically disturb their business profits. In fact, it could greatly affect whether they make a profit at all!

Increase in Food Prices Paired with a Decrease in Value of Real Estate

In connection with the vast importation issues that the United Kingdom is facing in the wake of Brexit, there is also another major problem related to the soaring cost of foods. This greatly was underestimated by policymakers because even the most basic vegetable that was previously imported from France, for example, now has a major price tag that makes it difficult for consumers to afford and shopkeepers to make a profit off of.

The key to mitigating these issues will be for the policymakers to barter treaties related to importation of food items in order to come up with a cost of food that is agreeable to everyone.

Another market that has been greatly affected by Brexit is the real estate market in the United Kingdom. Where this has been particularly significant is related to those consumers that greatly overpaid for their real estate in the years leading up to Brexit. What has occurred as a result is that there are more buyers that would like to buy in the United Kingdom; however, there is not enough real estate to go around. Thus, there has been a major increase in price due to the limited amount of real estate available, which reflects that individuals are not selling because they overpaid so much that if they sold, they may not be able to afford a piece of property with similar amenities.

The Devaluation of the Pound Against the Euro

The Pound has always been a currency that has possessed a very high value in comparison to other worth currencies. In fact, the Pound has historically had a value that was two-to-one in relation to United States Dollars. Due to the Euro’s recent instability, the Pound has also seen similar ratios in relation to the Euro.

That being said, Brexit has caused a lot of worry with prospective investors in the United Kingdom, making the Pound already decrease in value. Many economists are speculating whether Brexit will cause further damages to the Pound’s stability in the long term due to the unpredictability of the strength of the corresponding trade agreements that will be negotiated and how they will impact the economy in the United Kingdom.

One great option is to hedge one’s Pounds into Euros as an insurance policy while waiting for this unpredictable fiscal period to pass. This way, should the Pound greatly decrease in value, it will be quite helpful to have Euros that have retained their value on the side.

A highly recommended resource to use for these transactions is to use a specialist company like Currencies Direct, OFX or WorldFirst . All 3 firms accept clients globally so you don’t necessarily have to be British or even European. Doing so will be a major asset to help you protect your capital until there is more clarity about how the Pound will fare. Read additional reviews about these firms on MoneyTransferComparison.com.

The Euro/Pound rates are picking up for Britons in November due to two main reasons – Italy will have its own EU leave/stay referendum in December, and Trump being the elect US-president which wreaks havoc in all currency markets. Still, the long term outlook on the GBP/EUR would be almost parity, meaning that the Pound will drop another 10% unless Italy leaves the EU.

Concluding Remarks

Brexit is a recent decision that has raised a lot of skeptical eyebrows because it is difficult to understand the rationale behind leaving the European Union trade agreements for a country such as the United Kingdom that does not have infinite resources of its own. Additionally, the quality of life of their citizens will be greatly impacted by funding that is taken from important social programs and put towards restructuring their entire trading system.

In the coming two years, it will be fascinating to see how Brexit impacts the lives of everyday British citizens who will be the ones at the forefront dealing with the aftermath of the economic changes decided by policymakers. Only time will tell to see if they really made the right decision or whether they made a gross error that will cost the United Kingdom in the years to come.