By Will Childs and Grayson Moniz
In June 2016, the United Kingdom voted to depart from the European Union, a monumental decision known as Brexit. Although their actual departure would not happen until January 2020, it immediately disrupted the nation’s political and financial spheres. The UK had existed and functioned within an integrated European framework for several decades, benefiting from free movement, ease of trade, and coordinated economic governance. Brexit symbolized political segregation from the rest of the EU and a major shift in the nation’s economic proceedings. This structural realignment catalyzed major change in the nation, predominantly through two vital macroeconomic indicators: inflation and unemployment.
Prior to Brexit, the UK had a relatively stable economy. The Bank of England was responsible for low inflation and a decline in unemployment after the financial crisis of 2008. The decision to depart from the EU shocked the nation’s economy. The pound sterling declined immediately after the votes had been finalized and fell to a 31-year low compared to the US dollar [8]. The falling exchange rate made imports more expensive, raising prices for the consumer and elevating inflation [7]. While the headline unemployment was relatively unaffected by Brexit, labor market dynamics faced growing instability. Specifically in sectors like agriculture, hospitality, and healthcare, which rely on EU workers, shortages became predominant [4]. Additionally, new immigration rules and trade frictions made hiring and production more complicated for producers.