How Hard Will Brexit Be On UK And Pound ETFs?

Prime Minister Theresa May hinted toward a hard Brexit setting spotlight back on UK and Pound ETFs. May’s comments on leaving EU have fueled speculations that the U.K. will prioritize controlling immigration over access to Europe’s single market. May plans to start official exit negotiations by the end of the first quarter of 2017. However, there is not much clarity on the government’s strategy (read: 6 Biggest ETF Stories of 2016 Worth Watching in 2017).

As per the Treasury, a 'hard Brexit' –implementation of firmer regulations on EU immigration, exit from the EU single market and imposition of trade barriers between the two parties – may lead the U.K. to lose about £66 billion (per year) and reduce its GDP by nearly 9.5% after 15 years. Lower GDP growth and tougher export conditions would hit several sectors like retail and financial services among others and therefore have an unfavorable impact on British equities.

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