So at this point, many of you may be wondering how this will affect your life.
Well fundamentally, the devaluation has both positive and negative impacts.
The most obvious negative impact is that it will become more expensive to buy items from other countries. For example, if you wanted to buy something from the United States for $150, before the referendum you would have had to pay just £100, but now the same item would cost you £116.21.
This will obviously affect UK businesses too as some rely heavily on importing supplies from overseas to sell in the UK market. As a result, the chances are that food prices will go up alongside other key consumables like clothes or technology.
The other side of this negative is that UK products will become cheaper for businesses in other countries to buy. As a consequence, it may mean that people in other countries buy British products or services more – which will benefit our economy.
One sector that is likely to see growth in the post-Brexit era is tourism, as it will become cheaper for people from other countries to come and visit the UK.
Domestic travel in the UK is likely to increase too though as foreign holidays will become more expensive, which means that UK-based travel companies will benefit.
Although that might sound great, tourism only makes up around 10% of the UK’s GDP (which currently stands at $2.855 trillion).
A major problem for the UK as a consequence of the devaluation of the pound is how attractive it is for foreign workers to come and work here. This is because wages in the UK will become less valuable in other currencies.
For example, imagine that you are a doctor in America earning $313,000 per year (on average), would you really be motivated to move to the UK to earn $103,009.82 per year?
Of course, $103,009.82 is still a great salary but you can see how drastically different the salaries are. If an American doctor was to move to the UK, he would essentially cut his salary by $210,000… which would be a pretty silly move financially.
I appreciate that many of you would argue that the healthcare systems are different and that different salary outcomes are to be expected between the US and the UK, but the fact of the matter is that the UK is becoming less and less attractive to foreign talent. This will not only affect our overall quality of life but it will also affect the quality of our services and products – which has a knock-on effect on our economic prosperity.
In the future, the UK could have real problems attracting talent, especially as wages are set to stagnate further. Unless there is a significant growth in wages, the UK will become less and less competitive internationally.
This will have a significant impact on other sectors like farming, where farmers have already cited their concerns about not being able to hire enough staff (mostly from Eastern Europe).
Workers from Poland, for example, are now finding it less attractive to work in the UK as wages have risen significantly in the country in the last decade. Standards of living have increased in Poland, while property prices remain reasonably low, meaning that owning property is more feasible for the average Pole.
It’s obvious that the UK is less attractive when property prices have continued to increase and when wages have stagnated.
The reliance on Eastern European human capital was a perk for British farmers and British factory owners, one that is gradually diminishing as the UK prepares to leave the EU.