Visionary policies can surmount Brexit crisis

It’s going to be two months since the June 23 EU referendum and the mounting impact of a plunging pound. A recent report says that the prices of goods – from cars and computers to some foods and property – are increasing. And it is the consumers who are bearing the brunt of the rising costs. The apparent fear is that if the sterling continues to go down, the fallout would spread
further.
Although Brexit is putting pressure on prices and British economy, figures don’t bring out the actual and entire picture. A small rise in inflation of 0.6% has been reported in July. However, analysts feel that this inflation will go up in the near future as pound weakens more. ING bank economist James Smith rightly said, “One of the big questions facing policy-makers in the UK at the moment is how quickly, and how much, the plunge in sterling following the referendum will raise inflation.”
There are apprehensions that as the value of sterling wanes, it would translate into higher costs for imported goods. The biggest impact would be on the food prices, since 40% of it in the UK is imported. The website mysupermarket.com reported a hike of 1% in the price of an average basket of supermarket goods in July. This is quite substantial and will majorly hit the commoners. Consumers’ purchasing power will also be affected due to the inflationary trend. What’s worse, as some experts warn, companies may clamp down on workers’ pay as they strive to save costs in a more difficult environment. The recent labour-market data is extremely deplorable. The Bank Of England (BOE) forecasts unemployment, which is 4.9% right now, will rise to 5.5% at the end of 2017.
So, it is a very sorry scenario. Even though Britain’s exit from EU will take another three years or so, the British economy is already feeling the far-reaching backlash of the referendum. It is crucial that the British ministers work on the key negotiations before the departure actually starts. The good thing is that they have enough time to do so as France elections next year and Germany polls will delay the exit process. The new department – the ministry for international trade – formed by Prime Minister Theresa May has to act responsibly and not just oversee the negotiations but be instrumental in the best deal that UK can hammer out.
As studies show that inflation acceleration puts a lot of risk on the economic landscape in the coming months and the resultant price pressure assails consumers, it is imperative that the UK government devises a plan that can make the situation less volatile. Uncertainty will make the markets more wobbly and stunt economic growth. More visionary leaders are needed who can chart a course for UK towards financial sturdiness and stability. This will largely depend on cutting on imports and reliance on locally-made goods. Good policies can tide over the post-Brexit slowdown and dilute the negative ripples of referendum. Undoubtedly, it is a crisis of a grave magnitude but there are ways to get out of it. It is the right approach and a positive outlook that will help to deal with this tough challenge.