Economic reality is catching up with the U.K., where it is becoming clear that leaving the European Union will lead to lower living standards, billionaire investor George Soros said.
“We are fast approaching the tipping point that characterizes all unsustainable economic developments,” Soros wrote in an article published Monday on the website of the Project Syndicate news organization.
“The fact is that Brexit is a lose-lose proposition, harmful both to Britain and the European Union. It cannot be undone, but people can change their minds. Apparently, this is happening.”
Although the U.K. economy initially defied predictions of an immediate slowdown after the surprise Brexit vote, signs are now emerging that consumer spending is faltering as the weaker pound drives up prices. Economists in Bloomberg’s latest monthly survey see inflation reaching 3 percent by the end of the year.
Bank of England Governor Mark Carney, in a speech at London’s Mansion House on Tuesday, said domestic inflation pressures remain subdued and signaled he isn’t in a hurry to raise interest rates. In his first major comments in six weeks, he also said he wants to see how the economy responds to the “reality of Brexit negotiations.” The pound fell after the remarks.
Soros said Britain’s eventual exit from the EU will take at least five years to complete, during which the country will probably hold another election. “If all went well, the two parties may want to remarry even before they have divorced,” he wrote.
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