Article Analysis Essay on International Economics

Introduction

This article is about the cry of Britain, over the depreciation of the sterling pound, stating that the Brexit will make them poorer since the pound has hit a 31- year low. Relating to the international Economics, the UK leaving Britain would create uncertainty for their investments since there is a falling demand which leads to the depreciation of the pound. The article also states that before the referendum and role for Brexit, the pounds was overrated and it could be that it is returning to the equilibrium states since it is a floating exchange rate, it is self -adjusted.

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When the pound depreciates, foreign demand for export will increase, British demand for imports will decrease which will make aggregate demands rise. Which consequently, inflation would fall, in exporting industries, economic growth will speed up. Current growth will speed up and current account balance will improve.

Talking about disadvantages and disadvantages, there will be an increase in domestic productions but an increase in the cost of productions, which would end up with higher prices for domestic consumers. It will also be advantageous for the UK export business since the sterling's depreciation has already increased its price competitiveness. It is worth reinstating the implication of sterling rapid depreciation. It means more expensive holiday's for Briton heading abroad -as many travelers will have already discovered the hard way. The leavers are now becoming more and more expensive as the pound continues to fall.

Down the line, it is likely to push up inflation sharply as the price of import rises. This will squeeze the purchasing power of people's wages. Negative impact on importers since the cost of Dollars dominated raw materials that many UK factories and business needed is rising fast and those will be passed by British consumer in the end. It is also worth remembering that the large depreciation of sterling in the global financial crisis of 2008was much less of a stimulus to our domestic exports than we hoped. It has become a great worry in Britain for difficulty in stating with any degree of certainty what the net impact of currency depreciation will be for an economy and the living standards of its population.

A more useful exercise is to consider why the currency markets are reacting in this way, sending sterling down to a new 31 year low this week. CaBP to USD exchange rate- the 1-year value of one British Pound Sterling in the United States Dollars. Source Xignite as of March 12, 2017,/ Refreshed March 13, 2017, 5.26 am ET. The solutions for Britain is to stay tariff free and let the EU do what they want, then introduce an immigration Cap of 50,000 with a PS5000 deposit from all newcomers. Britain's economy would explode. We'd be Singapore on steroids. Brexit is a little like Saudi Arabia swearing off the oil business declaring it would rather work for an honest living even if that makes its people poorer. That might sound noble though it does make one reflect on the lack of policy imagination that led voters to make themselves poorer so what they could work harder for what they get.

Yet British Industry might find it more difficult to pivot to new foreign marketers than British services. In the trade of goods, distinct, do a surprisingly good job explaining actual trade patterns. Ironically the digital revolution has reinforced the importance of distance by enabling the growth of supply chain trade; the coordination of production across suppliers in lots of different countries. If leaving the EU cost British firms their position within the supply chains. Brexit will make Britain poorer and they will get nothing at all in return. No exchange in immigration (because with the economy hobbled there is no chance of us doing anything to harm it further). No gain in sovereignty, no gain in global trade.

Conclusion

All Britain has achieved by voting is to alienate their closest neighbors, damage the economy of the countries that they traded with most, throw a spanner in the cogwheels of Europeans cooperation leaving them at the mercy of countries like China and Russia. Damage caused by depreciating pound will lead to the country's economy sabotage, unemployment and poverty will not enable a price worth paying to avoid having to follow the rules of the most successful free trade zone. We voted out by small majority simply because many of the voters were incapable or unwilling to understand the economic conservativeness of leaving. It was easier to believe the flagrant lies of the left campaign because they work simple.