To stabilize the financial system in the UK after the country’s withdrawal from the EU without raising taxes and cuts in government spending will fail, said the Chancellor of the exchequer George Osborne.
“We have to provide a financial security, we have to prove to the country and the world that the government can live within its means,” explained Osborn (quoted by Reuters.)
To a journalist’s question whether this will require raising taxes and reducing government spending, the head of the British Ministry of Finance replied directly: “Yes, absolutely”.
On the eve of the referendum on withdrawal of Britain from the EU it was reported that, according to the Treasury, UK Treasury for four years after Brexit will lose about £30 billion, and the deficit will have to compensate by increasing income tax, excise taxes on gasoline and alcohol and other charges. Another source of deficit is called the reduction of expenditures on health care, defense, education, police and transport.
In may 2016, the British Treasury has published an analysis of the possible consequences of the decision on Brexit. The document stressed that after the withdrawal of Britain from the EU can go to either “shock” or “very shock” scenarios. In accordance with the first of the country’s GDP in two years will be reduced by 3.6%, the pound will fall to 12% and the number of unemployed will grow by half a million people. The implementation of the second scenario threatens Britain’s GDP falling by 6%, 15% devaluation of the pound and unemployment rise to 800 thousand people.
After the victory in the referendum supporters of Brexit the British pound fell to its lowest since 1985 $1,3121. However, respondents to the FT, analysts do not exclude that in the next few weeks, the pound may fall to $1.1. So cheap it was 31 years since 1985, when it dropped to $1,04.