BREXIT

BY PANGRUM, JOHNNY, AND POP

MAY 29, 2017
 INTRODUCTION
How did BREXIT annoucement affect UK economy and
cause UK Pound to drop?
Many incidents happening in the world affect world economy one way or
another. In 2016, the issue of Britain leaving the European Union, often referred to as
Brexit, was the most unexpected event in the view of people around the world. The
process of exiting EU has never been done before and it required a lot of thing to
complete the process including the voting of British citizens. However, even before
the announcement of whether Britain would leave EU or not, the economy of britain
and the world had already been affected. Currency rise and fall depends on supply and
demand. Hence, changes in value of currency, although not always reflected nation
economy, indicates some ideas of economic conditions.
Brexit was being talked, commented, and predicted what would happen after
2019. Other interesting topic would be how did Brexit affect UK economy after the
announcement to leave the EU There are many solid evidences that proof the change
of UK economy, which are briefly explained in this magazine in the following pages.
However, this magazine focus mainly on the drop in value of UK pound and its
relationship to the announcement of brexit with the result won by 51.9% leave.
Reasons for value of UK pound dropping in 2016 is undoubtadly because of
brexit announcement. However, the question is why; what does brexit have to do
with value of pound and what is their relationships. This magazine will stated
analyzed details of Brexit and its effects on UK pound.
 February 2016
Date of referendum announced
May 27, 2016
Purdah started
June 24, 2016
National declaration of the
referendum result
The EU referendum was announced
by Prime Minister David on February, 2016.
Then in April 15, he leaving and staying
sides' campaign tried to advertise with a
restricted money supply during this period.
Purdah started in May 27 meaning that only
final fours weeks were left before the
referendum. Finally in June 23, British went
to vote whether UK will leave Eu or not. It
was the biggest decisions in the history of
Britain.The result became clear at hundreds
of venues across the UK with the victory of
Brexit. 51.9% of people vote for leave and
48.1% vote to stay. Around 72.2% (more
than 30 million of people) came to vote.
April 15, 2016
Referendum campaign kicks off
June 23, 2016
voting day for the EU referendum
March 29, 2019
Plan to leave
The next day in June 24, United
Kingdom officially declared the Brexit
victory. In this day resignation UK prime
minister David Cameron resigned and
Theresa May became the next prime
minister. The value of the pound dropped
as Brexit campaigners celebrated around
the country. As scheduled, UK will leave
EU on Friday, 29 March 2019, after
Britain triggered Article 50 in March
2017. The process to leave EU takes a lot
of time because it has to go over 43
years of treaties and agreements of
different thousands subject and it has
never been done before.
 Article 50
It is part of Lisbon treaty that set out the rules for leaving EU. According
to Matthew (2017), it stated that a leaver should notify the European
council of its intention, negotiate a deal on its withdrawal and establish
legal grounds for a future relationship with the EU (para.2).

What is Brexit ?
BREXIT is a short way to say the UK leaving EU
( European Union). It stands for British Exit.
What is EU?
EU stands for European Union. It is an economic and political partnership of 28
European countries including Austria, Bulgaria, Belgium, Croatia, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland,
Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal,
Slovakia, Slovenia, Spain, Sweden, Switzerland, and United Kingdom. It began
after World War II to help boost the economy with the idea
that trading between countries together will
avoid the war with each other.
 WHY BREXIT?
After World war 2, the EEC or In addition, the main reason Uk
European Economic Community had been
established but United Kingdom did not
participate until 1973. After that, between
1980 to 1990, the development of EEC was
quite good and have changed to be EU,
European Union. However, United Kingdom
did not participate and did not agree to
some of EU policies especially using the
Euro currency. It all started the
dissatisfaction of the EU politicians to
against United Kingdom. British people also
want to reduce num of immigration from EU
want to leave EU is because the
economic downturn of United
Kingdom. and English thought EU is
the cause of all problems. BREXIT
supporters believed that if United
Kingdom leaves EU, the economy will
get better. And also, there were latest
problems which were Eurozone crisis
and terrorize that can impact English.
By these reasons, United Kingdom
came to a decision to leave EU.
What do British people think about Brexit?
According to Ivana(2017), British households confidence in Brexit has
decreased by 10% from July 2016 to March of this year. The survey showed
that 39% of British believed Brexit will be good for UK in July 2016. The
number of households that expected economic to worsen has alsoincreased
from 42% to 53%. The only groups of people who viewed Brexit as beneficial
are workers who worked in manufacturing and construction because they see
the weaker pound as a boost to exports.
 Result of the vote
England voted for Brexit, by 53.4% to 46.6%. Wales also voted for
Brexit, with 52.5% of Leave and Remain of 47.5%. Scotland and Northern
Ireland both vote for staying in the EU. Scotland vote is 62% to 38%,
while in Northern Ireland voted is 55.8% to 44.2%.

CREDIT : BBC NEWS

 Brief result of the Brexit
announcement to UK Economy
Following the announcement of brexit, value of pound dropped to
$1.33 when before that it was $1.50. It was the lowest value since 1985
with the pound dropping more than 7% against the Euro. Moreover,
Britains vote to leave European Union pushed down world stock market
and resulted a deep fall. People started to looked for more reassuring
assets such as gold, precious metal, and a long-time investment. House
price has also been falling from 9.4% to 7.2% in Central london Market
in December.
 Reason for the fall in value of pound
Value of currency depended on For instance, in February, British former
many factors such as growth, interest rate, London Mayor and the most famous
and inflation. Currency is like other politician Boris Johnson said he would
commodities that their value depended on support the campaign for Britain to leave
basic supply and demand. Investment and any the EU. Following his words, the value of
economic activity also affects currency value. pound dropped to seven year low. People
Consumers play major role in changing these saw this as a signal that brexit would bring
factors that affect currency value. In this case the economy down and all other
for Britain, it had weak economy and its uncertainties with it.
citizen had low confidence in the economy. Moreover, people around the world
As mentioned in the previous topic; only 29% gradually lose faith in pound because there
british people in March 2017 believed that is a high risk that the economy will crash
brexit will benefit the United Kingdom. after brexit as scheduled in 2019. The
Hence, combined with inflation and increased main point is that nobody know what will
product price, consumer spent less money happen and all the uncertainties of brexit
and buy less goods. Firms decreased made people insecure and most experts
production and buy less from firms, resulted thought the pound will continued to fall
in rising unemployment and the economy further. In conclusion, low consumer
was further weakened. British ideas and confidence and the following weak
opinion on their economy is the main reason economic activities are the main reason for
for the fall in pound value. the fall of pound value.
 Drop in pound value affects
Holidaymakers
People who changed their money into Euro or dollars after 23 June could not get the
same amount of Euro or dollars for the same amount of pound as before because the
value of pound had dropped. Some airport bureau de change offered less than 1 for 1
even though the exchange rate is more than 1.14.
Families
In February 2017, UK inflation rate had risen to 2.3%, which is the highest level for
three and a half year. Imported goods were rising in price and the price of raw
materials used by firms was increasing rapidly. Therefore, customers had to buy
product with higher cost.
Companies
Some good can be exported with cheaper price on world market. This could increase
profit of the company. However, the fall in value of pound also lower value of some
business asset.
Mortgage borrowers
British who are buying mortgage in Britain were not directly affected. However, if they
bought mortgage abroad, they would not get the mortgage their money could afford
before. Alternatively, if foreign currency was used to buy in UK, it would be benefitted.
Tourist sector workers
UK was cheaper and more attractive. with the fall in value of pound. There were more
tourists and it was good for business that aim at tourists.
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