November 29, 2020

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“Cornerstone of the UK economy disappears after Brexit”

"Cornerstone of the UK economy disappears after Brexit"

Photo: Getty Images / Bloomberg Creative

The British withdrawal from Europe is even worse for the country’s economy than previously thought, British scientists predict. Foreign investment, a cornerstone of the economy, has fallen 37 percent. That is twice as much as predicted.

Researchers from University College London (UCL) and the London School of Economics (LSE) examined the consequences of Brexit in a new study. You write that the European single market has been very important to the UK since it was founded in 1992. According to LSE professor Nauro Campos, the country has received the most so-called foreign direct investment in the European Union in the past 20 years.

This type of investment resulted in a flow of money and technology, knowledge and innovation. According to the researchers, the influence of this is long-lasting. Many foreign investors also used the UK, for example, to export products to the rest of the European Union.

Foreign investment

Brexit will “significantly and significantly” reduce foreign investment, says Campos, who describes access to the internal market as “very important” for the UK economy. The number of investments has declined since the Brexit referendum in 2016. In 2018, the UK received £ 49.3 billion this way. A year earlier that was £ 80.6 billion.

The researchers also find that EU membership, and thus access to the European single market, is much more important and has a greater impact on investment from abroad than a trade agreement like the NAFTA treaty between the US, Canada and Mexico.

Many UK institutions used the researchers’ earlier economic projections to calculate the long-term effects of a Brexit.

London and the EU are currently in intensive negotiations on a trade agreement. The deadline for this is Thursday.