20th August 2019 – Brexit will be Great Britain’s second Suez crisis according to Dr Mamdouh G Salameh, visiting Professor of Energy Economics at ESCP Europe and international oil economist.
The Suez crisis in 1956 was not only a blow to British prestige, it also led to a shrinking of the British economy, a devaluation of the pound Sterling and ejection of Britain as a major player on international stage.
As with the Suez debacle, Brexit has already had a similar adverse impact on the British economy, gross domestic product (GDP) investment and the value of the pound even before the UK actually left the European Union (EU), says Dr Salameh.
Nobel-winning economist Paul Krugman, estimates that Brexit could cost around 2% of GDP. Other studies suggest that Britain’s GDP could shrink by 2.0%-4.5% and per capita income by 1%–10%. Meanwhile, the International Monetary Fund (IMF) reduced its 2020 economic growth forecast for the UK to zero with the British economy in fact shrinking. By the beginning of April 2019, banks had transferred more than $1 trillion out of Britain and asset management and insurance companies transferred US$130 billion out of Britain.
Since the referendum, the pound sterling has lost more than 23% of its value against the dollar and 8% against the euro. Furthermore, a weak pound raises British import bill adding to domestic inflation and budget deficit.
Dr Salameh says “because of the self-inflicted damage on the British economy by Brexit, there is a growing tide among the British public for a second referendum that could reverse the outcome of the first referendum thus enabling Britain to bury Brexit forever. He added “that a second referendum is the only solution to the political and economic crisis debilitating the UK and also threatening to dismember the Union”.
