UK: Mediocrity exposed
This is not a report that tries to divine its way through the UK’s shambolic political scene. Instead, it examines the implications of what we can predict. Whatever route the country takes out of Europe, the longer-term impact of the Brexit decision will be negative. In the absence of a frictionless trade agreement, the UK’s its allure as a European investment destination will dim. It is a double KO for UK productivity, which has already spent a decade on the canvas. While a deal that leads to a smooth transition would buoy sterling short-term, the structural challenges Brexit creates means the currency will be the primary adjustment channel longer-term.