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Brexit Aftermath

It has been a turbulent few weeks for Britain. The Brexit referendum led to an unexpected Leave win which in turn led to the resignation of Prime Minister David Cameron who had campaigned for Remain. He has been replaced by Theresa May, the former Home Secretary.

Leading Leave campaigners, seemingly also shocked by the result shied away from the spotlight including Nigel Farage, who surprisingly resigned from leader of the United Kingdom Independent Party (UKIP) stating that he has “fulfilled a lifelong ambition” and that he now wants his “private life back”.

Since the referendum results were published, the British Pound lost over 7% of its value against the US Dollar, with the sharpest loss felt on June 24th, the day after the referendum. The British Pound has also lost value against all the other major currencies. However the Pound’s fall has been mitigated by Theresa May’s appointment as prime minister much earlier than expected which has brought about “stabilising rhetoric” and the formation of a new government. The Pound’s value against the US Dollar and the Euro has been leveling off. Having hit its lowest value against the dollar in 31 years, the Pound to Dollar exchange rate stood at $1.32 on July 20th. The Pound’s value against the Euro was just under 1.19 on the same date, a considerable fall from the €1.32 it was trading at before the Brexit result announcement.

The Bank of England also came in to further stabilise the Pound by announcing that capital requirements for banks would be relaxed to increase lending by a capacity of over 150 billion Pounds. Capital requirements have been eased in order to avoid a credit crunch as the Bank of England wanted to ensure the availability of credit for households and businesses. Further stimulus was hinted at by then Chancellor George Osbourne on July 4th. He promised to reduce corporation tax from 20% to 15% although it is uncertain whether this will be introduced by his replacement Philip Hammond. 

On July 14th the Bank to England decided to keep the Bank Rate on hold at 0.5%, despite the firm forecasts that it would be cut by money markets and economists. Experts are now suggesting that the Bank will cut rates in August, when it also delivers its annual Inflation Report. A speech given by the Bank’s chief economist Andy Haldane hinted at measures beyond rate cuts, such as quantitative easing. This is a programme undertaken by central banks to stimulate the economy by buying assets (usually bonds) from commercial banks and other financial institutions thus raising the prices of those financial assets and lowering their yield whilst simultaneously increasing the money supply.

In short, Brexit has clouded the outlook for the British economy. That uncertainty is thought to be putting off investment as firms and households are not sure how the economy could be affected. If people stop spending due to fears about the future, the country could fall into recession. An interest rate cut would encourage the country - both by businesses and individuals to spend their money rather than leave it in the bank. However, according to the British newspaper The Guardian, “There had been little evidence of any impact on consumer spending on services and non-durable goods, although there were reports of consumers becoming more hesitant around purchases of higher-value goods”.

Information published on July 22nd revealed that Britain’s economy has suffered a ”dramatic deterioration” since Britain’s vote to leave the EU, according to a closely-watched survey of activity which has slumped to a seven year low. A special edition of the Purchasing Manager’s Index (PMI) - a well-regarded survey of activity produced by research group Markit- has been published to provide a picture of how the UK economy has fared since the referendum. Services and manufacturing services both suffered a big hit in July. They are contracting at the fastest pace since 2009 as output and new orders fall across the sector with many firms blaming the uncertainty caused by June’s EU referendum. It suggests the UK economy is shrinking at a quarterly rate of 0.4%.

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Wara l-Brexit

L-aħħar ġimgħat kienu pjuttost imqallba għar-Renju Unit. Fir-referendum tal-ħruġ mill-Unjoni Ewropea, magħruf bħala ‘ Brexit’, bla mistenni, rebaħ il-kamp ta’ favur il-ħruġ - ħaġa li wasslet għar-riżenja tal-Prim Ministru David Cameron, li kien favur li r-Renju Unit jibqa’ fl-UE. Postu ħaditu Theresa May, li kienet Segretarja tal-Intern fis-sitt snin ta’ qabel.

Fl-istess ħin, b’sorpiża, nies ewlenin li kienu qed jikkampanjaw favur il-ħruġ, minkejja li rebħu mingħajr ma kienu qed jobsru, ippreferew jaħarbu l-attenzjoni fuqhom u wħud saħansitra warrbu. Ewlenin fosthom Nigel Farage, li ħabta u sabta rriżenja minn mexxej tal-Partit għall-Indipendenza tar-Renju Unit (il-UKIP) għax, skont hu, issa kien “laħaq l-ambizzjoni li kien ilu jaħdem għaliha ħajtu kollha” u għax jixtieq “il-ħajja privata tiegħu lura”.

Minn meta tħabbar ir-riżultat tar-referendum, il-lira Ingliża tilfet aktar minn 7% fil-valur tagħha, meta mqabbla mad-dollaru Amerikan. Dan it-telf inħass l-aktar l-għada li tħabbar ir-riżultat tar-referendum. Barra minn hekk, il-lira Ingliża tilfet ukoll il-valur tagħha meta mqabbla mal-muniti ewlenin l-oħra kollha. Din il-waqgħa fil-valur tal-lira Ingliża mbagħad batta mal-ħatra ta’ Theresa May bħala prim ministru, aktar kmieni milli mistenni, ħaġa li ġabet aktar stabilità u li wasslet biex jinħatar kabinett ġdid. Il-valur tal-lira sterlina kontra d-dollaru u l-Euro f’dawn l-aħħar ġranet stabilizza xi ftit. Wara li l-valur tal-lira waqa’ fl-aktar livell baxx f’31 sena meta mqabbel mad-dollaru Amerikan, il-valur kien ta’ $1.32 fl-20 ta’ Lujlju. Meta mqabbla mal-ewro, fl-istess jum, il-lira sterlina kienet tissarraf f’kemxejn inqas minn €1.19. Din hi waqgħa konsiderevoli mill-valur ta’ €1.32 li kellha l-lira sterlina qabel tħabbar ir-riżultat ta’ Brexit.

Il-Bank of England ukoll ta sehmu biex jistabilizza l-lira Ingliża billi taffa r-rekwiżiti tal-banek marbuta mal-kapital u b’hekk 150 biljun lira sterlina ġew disponibbli u b’hekk ippermettilhom jagħtu aktar self. Ir-rekwiżiti tal-kapital ittaffew biex tkun evitata kriżi fil-kreditu. Il-Bank of England xtaq jassigura li l-familji u n-negozji jkollhom is-self li jeħtieġu. Fl-4 ta’ Lulju, l-ex Kanċillier George Osborne ta ħjiel ta’ inizjattivi oħra biex jgħin is-sitwazzjoni finanzjarja Ingliża. Hu wiegħed li t-taxxa għall-kumpaniji se tonqos minn 20% għal 15%, għalkemm il-pjanijiet għal dan it-tnaqqis fir-rata għadhom mhux magħrufa, issa li Philip Hammond inħatar bħala l-Kanċillier il-ġdid.

Fl-14 ta’ Lulju, f’laqgħa tal-Bank of England, ġie deċiż li r-rati tal-interessi se jibqgħu 0.5% – minkejja t-tbassir qawwi kemm mis-swieq tal-flus u anke mill-ekonomisti, li dawn kienu se jitnaqqsu. Dawn issa qed ibassru li l-Bank għandu jnaqqas ir-rati f’Awwissu, meta jippubblika r-Rapport tal-Inflazzjoni tiegħu għat-tliet xhur ta’ qabel. F’diskors li ta, l-ekonimista ewlieni tal-Bank, Andy Haldane, ta x’jifhem li se jittieħdu miżuri oħra lil hinn mit-tnaqqis fir-rati, bħal aktar għajnuna kwantitattiva (quantitative easing).

Dan hu programm li jagħmlu l-banek ċentrali biex jistimulaw l-ekonomija billi jixtru l-assi (ġeneralment bonds) mill-banek kummerċjali  u minn istituzzjonijiet finanzjarji oħrajn, ħalli b’hekk jgħolli l-prezzijiet ta’ dawk l-assi finanzjarji u jbaxxu d-dħul tagħhom, filwaqt li jżidu l-provvista tal-flus fil-pajjiż.

Fi ftit kliem, ir-riżultat tal-Brexit ċajpar ix-xejra ekonomika tar-Renju Unit. Din l-inċertezza, hu maħsub, li qed tnaffar l-investiment. Il-kumpaniji u l-familji mhumiex ċerti fuq kif se tkun affettwata l-ekonomija. Jekk kulħadd jieqaf jonfoq minħabba din l-inċertezza, il-pajjiż jista’ jidħol f’riċessjoni. It-tnaqqis fir-rata għandu jħeġġeġ il-pajjiż kollu – min-negozji l-kbar sal-individwi biex jonfqu flushom aktar milli jħalluhom depożitati fil-banek.

Minkejja dan, skont il-gazzetta Ingliża, The Guardian “Ftit li xejn hemm xhieda ta’ impatt negattiv fuq in-nefqa tal-konsumaturi Ingliżi għas-servizzi u għal oġġetti li ma jdumux ma jiġu kkunsmati (non-durable goods), għalkemm kien hemm xi rapporti ta’ konsumaturi li qed jaħsbuha darbtejn jekk għandhomx jixtru affarijiet ta’ valur għoli.”

F’tagħrif ippubblikat fit-22 ta’ Lulju, tħabbar li l-ekonomija Brittanika għaddiet minn ‘detriment kbir’ minn meta l-maġġoranza tal-Ingliżi jew aħjar ir-Renju Unit vvutaw biex joħorġu mill-Unjoni Ewropea. Dan sar wara li ġiet studjata mill-qrib l-attività finanzjarja tal-pajjiż, li qed titqies bħala l-agħar waħda f’seba’ snin. Ġiet ippubblikata wkoll edizzjoni speċjali tal-Purchasing Managers’ Index (PMI). Dan hu stħarriġ finanzjarju affidabbli minn grupp ta’ riċerkaturi bl-isem Markit. Dan jagħti stampa tal-attività ekonomika Ingliża wara r-referendum. Minnu jidher li s-setturi tas-servizzi u tal-manifattura, f’Lulju, ħadu daqqa kbira. Qed jonqsu bl-aktar rata mgħaġġla mill-2009 ‘l hawn, hekk kif il-produzzjoni u l-ordnijiet ġodda niżlu fis-setturi kollha. Ħafna kumpaniji qed iwaħħlu fl-inċertezza li ġab miegħu r-riżultat tar-referendum tal-Unjoni Ewropea. L-istudju jgħid ukoll li l-ekonomija tar-Renju Unit qed tonqos bir-rata ta’ 0.4% kull tliet xhur.