The British exit, namely Brexit, has caused some stir in the media since the \"l

Question

The British exit, namely Brexit, has caused some stir in the media since the "leave" vote prevailed over the "remain" vote. There are economic and political consequences. The link below is a NY Times article written by Nobel Laureate Paul Krugman. He points out some of the consequences of the "leave" vote. In 150 words (or more and no less): 1. Do you agree with Krugman? 2. If yes, (in your own words) argue why you agree? If no, argue why you disagree? Be sure to point out the economic benefits and costs of remaining or leaving.

http://www.nytimes.com/2016/06/17/opinion/fear-loathing-and-brexit.html?rref=collection%2Fcolumn%2Fpaul-krugman&action=click&contentCollection=opinion®ion=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=collection

Explanation / Answer

Even though 52z% has voted leave, there are various agreements that has to be made between UK and EU and this will take nearly 2 years. Till then UK will remain as EU’s foremember. Whats more is that the European Parliament could reject the British withdrawal agreement and this will only delay the British exit. However some countries like Germany , Netherlands and Ireland would want to quickly settle their British exit to minimize the financial stability. Yet the most immediate response in the Brexit will be financial as confidence in the pounds will decrease. The value of pounds has already plummeted against the dollar. This will also cause inflation.The cental bank will try to minimize this effect by increasing liquidity by lowering interest rates which will hurt the pounds even more.The most likely outcome that UK will fall into recession.According to the British Tressury the economy will contract by 3 to 6%.Another place where UK will be hurt is the common market.Exports and imports will be hurt. Until a free trade agreement is made, UK will be hurt in this respect.Moreover it takes decades for a free trade agreement to take place. The next prime minister will have to face all these consequences for the increase in austerity by high unemployment and low tax. It was majorly a choice between immigration and poor economy. Thus I go with the words of Krugman and support him.

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