‘SA ECONOMY FACES A SIGNIFICANT PERIOD OF UNCERTAINTY IN THE EVENT OF A BREXIT’ – TWO LEADING ECONOMISTS WARN ABOUT THE UK REFERENDUM NEXT WEEK
Prof Raymond Parsons
‘If the United Kingdom opts in favour of a Brexit in its referendum on June 23, it will generate a significant additional period of uncertainty for the SA economy’, say Professor Raymond Parsons, of the NWU School of Business and Governance and Professor Wilma Viviers, WTO Chair and Director of the TRADE research entity at NWU. Based on a preliminary internal study of the economic implications for SA of a possible Brexit next week, the two economists believe that in the event of a Brexit SA should immediately start drawing up contingency plans to best use the two-year period within which the UK would have to negotiate its exit from the EU. SA would then need to reassess several of its key trading commitments and their future. There was now almost general agreement that a Brexit would not only have a negative economic impact on the UK and EU, but also have ripple effects on many other economies. First prize globally would be if the UK decides to remain in the EU. ‘For SA the possibility of a Brexit also does not come at a propitious time for the domestic economy’, they add.
The two economists emphasize that wide-ranging authoritative assessments of the consequences for the UK itself of a Brexit range from the Bank of England fearing it may eventually precipitate a recession in the UK economy to Nobel Economics Prize winner Professor Paul Krugman’s warning that there could be a sustained 2% of GDP loss to the British economy. Whether the actual number is smaller or larger, the result will be a definite drop in UK GDP. The UK is the fifth biggest economy globally. A setback of that magnitude in its economy could have adverse spill-over effects for many economies linked either directly or indirectly to Britain’s economy, including SA and other members of the SACU – Botswana, Lesotho, Namibia and Swaziland.
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