The Prime Minister, David Cameron, announced on Friday 24 June he would be stepping down as prime minister by October, and he or his successor will need to decide when to invoke Article 50 which sets in motion the formal legal process of withdrawing from the European Union and gives the UK a period of two years to negotiate its withdrawal.Adjustment in the UK economy<\/strong> Process of leaving the EU<\/strong> EU treaties and laws European Union law will still remain<\/strong> Buffer for the economy<\/strong> Quantitative easing<\/strong> Weaker pound<\/strong> Point of maximum impact<\/strong> However, if the UK remains a member of the EU for at least another two years, much will depend on economic performance during this period.<\/p>\n Benefit payments<\/strong> Since the welfare budget amounts to approximately 28% of all government spending, there could also be cuts that reduce tax credits and benefit payments.<\/p>\n Budget shortfalls<\/strong> One further option the Government may consider is not to keep its earlier target to balance the books by 2020, known as the \u2018fiscal mandate\u2019. This would enable decisions to be made as whether to maintain benefit payments at current levels.<\/p>\n","protected":false},"excerpt":{"rendered":" For the UK to leave the European Union, it has to invoke an agreement called\u00a0Article 50 of the Lisbon Treaty. The Prime Minister, David Cameron, announced on Friday 24 June he would be stepping down as prime minister by October, and he or his successor will need to decide when to invoke Article 50 which… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"_links":{"self":[{"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/posts\/1633"}],"collection":[{"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/comments?post=1633"}],"version-history":[{"count":0,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/posts\/1633\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/media?parent=1633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/categories?post=1633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/tags?post=1633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nOn Monday 27 June, the Chancellor of the Exchequer,\u00a0George Osborne, said that the UK is ready to face the future \u2018from a position of strength\u2019 and indicated there will be no immediate emergency Budget. He also said there would still need to be an \u2018adjustment\u2019 in the UK economy.<\/p>\n
\nHowever, Mr Osborne said it was \u2018perfectly sensible to wait for a new prime minister\u2019 before taking any such action. He also said that only the UK could begin the process of leaving the EU by triggering Article 50 of the Lisbon Treaty.<\/p>\n
\nin the UK until it ceases being a member, and the UK will continue to abide by EU treaties but not take part in any decision-making as it negotiates a withdrawal agreement and the terms
\nof its relationship with the now 27-nation bloc.<\/p>\nSterling<\/h3>\n
\nThe value of sterling on Monday 28 June fell to a 31-year low as the effects of Brexit unfolded. Sterling dropped past $1.32\u00a0to $1.3192, its lowest since mid-1985, taking losses to 11.8% since the 23 June vote.<\/p>\n
\nGiven all the uncertainty, investors are pricing in a rate cut this year, with some analysts expecting the Bank of England to consider quantitative easing to provide a buffer for the economy. Within days of the Brexit result, gilt yields hit record lows with the 10-year benchmark dropping below 1%.<\/p>\n
\nMany analysts expect the value of the pound to fall significantly in the medium term. A weaker pound means that buying goods or services from other countries will become more expensive, inflation will therefore be higher and goods being sold to other countries will become cheaper for the buyers.<\/p>\nWages<\/h3>\n
\nThe economic effects of leaving the EU could cause unemployment to rise in the UK which would reduce the pressure for wage growth.\u00a0The Treasury\u00a0estimated that wages will be between 2.8% and 4% lower at the point of maximum impact.<\/p>\n
\nIn the event that economic growth is slower outside the EU in the short term, the Government\u2019s income could fall, leaving it with less money to spend. There have been estimates of the size of that possible shortfall varying between \u00a328bn and \u00a344bn by 2019\/20.<\/p>\n
\nUltimately, the UK\u2019s economic growth and potential budget shortfalls will very much depend on the precise nature of trade agreements and whether the UK will be a member of the European Economic Area (EEA).<\/p>\n