UK Brexit

 

UK Brexit

            Power said Adam S. Posen, a former member of the Bank of England monetary policy committee and now the President of Peterson Institute of International Economics in Washington it does not fix any underline problems in the midlands of England, the Prime Minister promises a bountiful future inspired no hope for Arabella Petts, a 22 year old college graduate. Intent of forging a carrier in publishing she has gained experience scrubbing bathrooms. More than a year after graduation she has yet to secure a study job why paying her bills through itinerant gigs as hotel house cleaner, and as a janitor at a local school Miss Petts frustration highlights the contrast between the British Economy as celebrated by Mr. Johnson and ascendant power liberated from stultifying bureaucracy of the European Union and the reality of a country contending with confusion and stagnating fortunes. The shortage of goods and labour are no way uniquely British problem. They are in part the result of the pandemic which was roiled economies around the globe. They also reflect the great supply chain disruption, which has clogged ports, high ways and warehouse from Shanghai to Savannah.

                While compelling businesses to scramble to hire workers but the turmoil is especially gave and potentially long lasting in Britain following the countries decision to leave the European Union. Investment and trade have been disrupted by welter of new procedures at ports while immigrants have forsaken the country, yielding severe shortages of workers. Mr. Johnson is now spotlighting one popular component of Brexit- new limits on immigration while casting the labour shortages as a curative for chronic low wages.

                In recent years under governments led by Mr. Johnson’s conservative party, the vast majority of rank and file British Workers have seen no increase in their pay, in part because of a weakening of Union Power, this, combined with budget austerity  has produced enduring bitterness in many communities. I am please to say that after year stagnation- more than a decade- wages are going up faster than before the Pendemic began. Mr. Johnson told his party gathering.

                Wages are indeed in key industries but the cost of higher pay for a select group or adding to strains on the overall economy, lifting the costs of food, fuel and other crucial goods for ordinary people while exacerbating difficulties for businesses struggling to recover from the pandemic. Its inevitable that we will see price raises, said Richord Walker the Managing Director of Iceland Foods, a British chain of supermarkets, in a recent interview with the BBC.

                By the end of next year, Britain Economy is expected to be growing at a pace of 2.2 % compared with the last quarter of this year- a slower recovery then in much of Europe, including France, Italy, Spain, Portugal and Ireland according to the latest forecast from the IMF.

                A sustained and complete recovery remains in our view, far from secure, the institute for fiscal studies and independent Research Institution in London, recently want. “Brexit compounds this challenge” Early evidence points to the beginning of a period of acute structural change with UK Trade.

                The structural change that Britain needs, say many economists, its is to shift in the direction of the economic model that prevails in Nordic countries like Denmark and Finland. There labour unions huddle with associations of employers presenting industries in collective bargaining sessions, with the tacit understanding that workers are entitled to a fair share of growth. Because wages are high in Nordic countries, companies tend to avoid competing in industries where success demands relentless cost cutting, instead focusing on innovative pursuits like technology and health care.

                Britain’s economy is challenged by a deep set and conspicuous lack of productivity growth. Productivity- a critical gauge for economist- is a measure of how much value is produced by an hour of labour, or an injection of investment. Raising productivity is widely viewed as the healthy and sustainable way to produce wage gains.

                Over the last two decades, Britain has fallen behind other advanced economies, with productivity expanding 0.4 percent a year there, compared with about 0.6 percent a year in Western Europe, according to the conference board, a business-supported international research group based in New York.

                The reasons for this disparity are the subject of debt, but many explanations center on Britain’s failure to inculcate needed skills. By 2030, two thirds of the British work force or more than 20 million workers are at risk of lacking basic digital  skills, without more training, according to a study from McKinsey, the business consultancy.

                Diminishing the influx of immigrants is likely to make the skills shortage worse by preventing talented people from entering the country and the labor shortage in producing higher pay job training. You can’t suddenly magic the extra skills and productivity  by increasing Wages “said Diance Coyle, a professor of public policy at the University of Cambridge “As as short-term fix, it’s not going to work”.

                Increasing wages for some workers amid weak economic growth actually diminishes productivity. It’s like reducing the size of the pie while handing bigger slice to a few people on table. Over all, nourishment does not improve. In Britain, productivity gains have varied widely by region wealthy areas of southeastern England, where finance is dominant, have pulled away from northern England, where former manufacturing powerhouses have lost factory jobs.

                This has proved to be a decisive shift in British politics and a key factor that produced Brexit. People in hollowed out former centers of manufacturing used the referendum as a protest vote against the Pro-European establishment in London. Labour party strongholds that have suffered joblessness shifted to the Conservatives, supplying Mr. Johnson with the margin that put him in the power.

                 Before the 2016 referendum that set Brexit in motion, voluminous studies warned that leaving Europe risked lasting economic damage. The 27 remaining members of the European bloc collectively purchased nearly half of Britain’s export a flow of goods that was sure to be impeded by a border separating the two sides of the English channel.

                Multinational companies that had clustered operations in Britain while serving customers across the continent would place future investments within European bloc. Finance would have to move jobs from London. Whether in agriculture or construction, businesses would suffer labor shortage.