If you’ve been following news in 2016 in the slightest, you’re likely aware of Brexit’s impact on the UK. It was the talk of the town, with many aspects of the UK’s economy suffering damage that would take years to repair. However, with the current questionable future of the UK economy, the pound is in for another dip.
The driving factors behind the decrease are inflation and rising energy costs. Like in most of Europe, Covid and the Ukraine war have converged to wreak havoc on everyday life. The economic consequences are starting to rear their head, and many believe the troubles are only starting.
The Bank of England seems to agree with those prediction. The UK’s central bank foresees a recession by the end of the year. That’s an especially significant concern for those living in bigger cities.
Along with inflation, there’s been a housing crisis, drastically increasing the cost of living in the UK. That has especially hit larger cities, with prices soaring disproportionately to the rest of the country.
On the currency market, the pound currently sits at 1.16 USD. That’s the lowest value it’s held since Brexit in 2016. It’s also had its worst performance against the euro since mid-2021. With a recession defined as an economy shrinking for two three-month periods in a row, the outcome is fairly likely for the UK.
Expert analysts within the country lament the state of its economy compared to the rest of the globe. The UK has been disproportionately hit by macroeconomic events due to its departure from the EU.
The manufacturing sector in the UK shrank for the first time since May 2020. Additionally, predictions say household disposable incomes will fall by about 10% in the near future. The cost of living is a prominent problem, and will be a major issue for politicians to solve.