Brexit is dominating the headlines yet again. It seems that Britain’s move to quit the EU has gained the praise of President Elect Trump. Just 5 days before his inauguration, Trump pledged to negotiate and sign a free trade agreement with the UK quickly. This comes as a surprise, since the president elect has been very vocal about his opposition to other trade agreements. This is a considerable prize that the UK might get for its Brexit move, but in the meantime, Britain got other encouraging news from the IMF.
Britain will grow more than the IMF expected in October
Unlike Trump, the IMF didn’t cut Britain any slack. Since the results of the Brexit vote came out, the Washington based organization, downgraded economic growth forecasts for the UK. It turns out that now the organization revised those forecasts upward. The UK is expected to grow 1.5% in 2017 up from a 1.1% IMF forecast in October.
Britain has been complaining about biased forecasts from the IMF ever since the Brexit vote results came out. Now if the UK can complete the coup and get an FTA with the US in around the same time frame it quits the EU, the IMF might have to revise future forecasts upward as well.
Britain can take advantage of Trump and a weak Pound
A scenario in which Trump keeps his word and a US-UK FTA becomes a reality, would turn all the talk against Brexit on its head. Ever since the UK decided to quit the EU, the Pound has been weakening. This means that British exports are getting relatively cheaper. If Britain can trade freely with the US, while the rest of the EU cannot, it will highlight the advantages of being able to make decisions on trade as a sovereign nation, weakening the EU further, but it also has the potential to reverse the divestment rhetoric.
In a world in which British products can gain access to US markets at lower costs, EU companies would have an interest in increasing their footprint in the UK. Until now, experts have said that Brexit would prompt companies to transfer their UK operations to mainland Europe. With a weaker Pound and a US-UK FTA, the opposite is likely to happen.
The IMF must now take into account the upside of Brexit
Should Trump reward the UK with an FTA, Britain could become a role model for other EU nations. So far, most Brexit doom and gloom scenarios have been swiftly dispelled. The IMF is just the latest organization to recognize that. It seems that 2017 and 2018 could be Britain’s brightest in decades, despite all the opinions to the contrary.