DSE 17-12

Before the British people voted against staying in the European Union (EU), i.e. Brexit, workers from EU were free to work in Britain and vice versa. Brexit has shocked the economies in Europe and the following table shows some views on Brexit.

(a) Referring to the view of the British politicians, explain how labour mobility of the low-skilled workers from the EU would be affected. (3 marks)

(b) Referring to the views of the British firm owners and global investors, discuss the effect of Brexit on the aggregate output of Britain in the short run with the aid of a diagram. (8 marks)

(c) Referring to the view of the EU officials, which TWO components of current account in the balance of payments of Britain may be affected? Explain your answer. (4 marks)