May’s Economic Answer to Brexit

By Evan Thomsen

Recently, the news coming from the United Kingdom has been that of court cases, timelines and the definition of true sovereignty for the British people. Underneath all of these stories about the practical implementation questions of how the UK will leave the EU lies the unveiling of the new economic plan from the new Prime Minister, Theresa May. Her plan revolves around large government investitures in infrastructure in an attempt to counter potential negative effects of Brexit.

Current estimates from the International Monetary Fund state that the Brexit deal will decrease the output of their GDP for the next few years. According to Keynesian economics, a government can spend money to make up GDP deficiencies. This is a tactic that May has taken to heart and is conducting.

The recent decisions of her government to approve the Heathrow expansion and the Hinkley Point nuclear power plant, are two examples. The Heathrow expansion, built over the next decade, is estimated to cost 17.6 billion pounds and Hinkley Point is at 18 billion pounds. Both of these projects not only provide the initial infrastructure investment and increase to the GDP, but will deliver long term economic benefits of more trade to London and cheaper energy costs for the whole of the United Kingdom.

Although these projects were already in the works prior to the Brexit decision, the fact that May was against Brexit lends to the argument that she is taking necessary measures to ensure the United Kingdom economy does not crumble as some have predicted after the national referendum. The counterfactual case of the “No” voter prevailing in the referendum can be seen that neither project would be approved. Numerous reports of citizens, members or Parliament and different ministers in May’s government have already come out in opposition to Heathrow, including the Prime Minister in the past.

In terms of Hinkley Point, opposition from both French and British citizens on various aspects of the project from the cost of the project to the ownership of the plant after completion have caused that project to be delayed until this point. The May government took ahold of both of these projects and are prepared to see them to completion and attempt to drive them to the end even through eventual legal challenges that they are expecting. Through the challenges to this law, May is attempting to see an increase in the economy from these projects.

Even though Brexit is facing challenges from the courts and potentially Parliament, May is still playing her hand as if Brexit is happening. Her government is exploring increases in government expenditures that will help the British economy and counter the decreases that many have reported. The Hinkley Power Plant and Heathrow’s third runway are verifiable attempts to do just that.

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