Economic Report 2017

4.2 Im p act of Br e x it &olloǁing the UK͛s decision to leaǀe the uroƉean Union ; UͿ last year, the UK Goǀernment stated its intention to materially change the country͛s relationshiƉ ǁith the U, as outlined ďy Wrime Dinister Theresa Day͛s Lancaster H ouse sp e e ch in J anuar y 2017 and t h e gov e r nm e nt ’ s sub se q ue nt White Paper 14 . T h e gov e r nm e nt h as st at e d it s intention to end the Ĩree moǀement oĨ ƉeoƉle, the UK͛s memďershiƉ oĨ the ^ingle DarŬet and ustoms Union, and oǀersight oĨ the uroƉean ourt oĨ :ustice, returning soǀereignty to the UK Warliament͘ In Ɖlace oĨ current U memďershiƉ, the goǀernment ǁould seeŬ a comƉrehensiǀe &ree Trade Agreement ďetǁeen the UK and the U͘ Short-Term Impact The initial result oĨ the U reĨerendum saǁ signiĨicant ǀolatility in Ĩinancial marŬets͘ &orecasters, economists and b ookm ake r s alike all p r e dict e d t h at t h e r e sult w ould b e t o r e m ain in t h e E U. T h e sur p r ise r e sult cr e at e d unce r t aint y ar ound h ow Br e x it w ould b e im p le m e nt e d and w h at t h e im p act w ould b e for UK b usine sse s. Inv e st or s ar e ge ne r ally av e r se t o unce r t aint y and t h e r e for e UK b usine ss h as looke d t o t h e gov e r nm e nt t o r e assur e financial ďacŬers, Ɖarticularly those Ĩrom oǀerseas, that their inǀestments ǁill not ďe negatiǀely imƉacted͘ esƉite this uncertainty, there ǁere some shortͲterm Ɖositiǀes Ĩor some sectors oĨ UK ďusiness͘ On the morning immediately aĨter the U reĨerendum result, ^terling Ĩell to its loǁest leǀel against the dollar since :uly 1ϵϴϱ, closing at 1͘ϯϯ Ψͬά 15 ͘ tithout any change to Ɖrices, UK edžƉorts ďecame more comƉetitiǀe oǀernight and more at t r act iv e t o for e ign b uy e r s. Although much oĨ the detail regarding the UK͛s ǁithdraǁal remains unŬnoǁn, an assessment is oĨĨered here on t h e p ot e nt ial im p act of Br e x it on t h e UK’ s oil and gas indust r y .

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