12 Aug British companies lock their expansion plans due to Brexit
12/08/2016 source “Expansión”
British companies foresee temporally suspend their expansion plans and hiring at the current situation of uncertainty generated by Brexit. Some analysts even believe that the British economy will enter into recession in the coming months because of the effects of Brexit.
The Bank of England warns, through a report made with data of 270 companies, that consumer spending slowed and the demand for products that require large expenditures fell after the referendum on the permanence or not in the European Union (EU) last June 23.
“The survey, which suggests that the fact that British companies are waging their expansion plans, is consistent with the general consensus among economists that the UK will experience a mild recession over the next six to twelve months,” said the economist James Knightley, at ING bank, to the local agency PA.
The Bank of England announced last week new stimulus measures to boost the economy and reduced the types of interest to the historical low of 0,25%. However, the British central bank reported today that could not meet last Tuesday its debt purchase targets set in its program, suffering thus an unexpected setback. The issuing bank hoped to buy bonds for a total of 1,170 million Pounds (1,350 million Euros), but the finally it could not buy 52 million Pounds (60 million Euros) of this total, an unprecedented scenario since it began its “quantitative easing plan” in 2009.
On the other hand, the influent British Institute of Fiscal Studies (IFS in English) issued a report which states that losing access to the European single market would mean to the United Kingdom a potential loss of 4% of Gross Domestic Product (GDP).
Economists of this entity state that the price that London should pay for access to the single market as an external member of the European Union is small compared to the benefits it brings to the country in trade and public finances, but also on the living standards that the trade agreement with Europe allows.