“Enough about other countries already! Now to more important matters, how does any of this affect me?”
Between the UK bringing the world’s financial markets into a nosedive and Donald Trump vomiting words into a microphone that makes you question if he REALLY understood the basic concept of Brexit, it’s been a pretty chaotic couple of days to say the least. And while most places have been giving the HOTTEST of takes about the UK leaving the European Union, there’s a question many in the US have been asking, “how does Brexit affect me?”
Well… in many ways it affects the US greatly and others only marginally. Let us explain.
American Businesses Having Their European Headquarters in London Could Move
Traditionally multinational companies have always placed their headquarters in London, which makes a lot of sense for US companies; an English-speaking metropolitan city that is relatively cost-effective compared to other European cities. Now that might have changed.
Part of the massive tax benefits that London once benefitted are now gone since the UK has decided to leave the European Union. London also acted as Europe’s financial hub – since doing business in London meant you could do business with the rest of Europe since it was part of the EU – but now, that’s gone as well. While many pro-Brexit campaigners have said that they will renegotiate with the EU so they can get a better financial deal than before, there’s no guarantees a post-Brexit UK can negotiate deep market access like it once had.
Regardless, businesses moving their European headquarters to either Frankfurt or Amsterdam have now become a real possibility. Which wouldn’t affect the US economy all that much, but would change the way we see London as the central hub of Europe.
The World Economy is Going Through Some… Issues, Right Now
The value of the British pound after #Brexit
— Crying Jordan (@CryingJordan) June 24, 2016
Let’s make no bones about it, in terms of the world economy, the Brexit has been bad news. The pound is at its lowest point in three decades, the S&P (along with the Dow) have plunged under 500 points, and as of this writing oil prices have completely bottomed out. So yes, the Brexit vote has absolutely affected the US economy in the short term. However the question remains, will this create a long-term effect on the US economy?
Based on what market experts have said; yes, but only marginally.
Unlike the UK markets, where the Brexit vote looks to shrink their economy by 7% (!!!), the US shouldn’t have that big of an economic impact. It’s been estimated that the US growth rate was only trimmed by 0.02%. Which if we’re honest, isn’t that major.
While the US markets are currently going through a bit of a blood bath at the moment, rest assured the long term affects won’t be that harsh.
Brexit : UK :: Trump : US?
While the UK’s vote to leave the EU does create a lot of uncertainty in their future, there is still one major question that should bug the US, how did it get to this point? With people like this woman waking up the morning after and doing their best Job impression:
The question becomes will Donald Trump end up being our Brexit?
It’s a concerning thought if you consider that both Trump and the Brexit decision base their core tenants on a fervent nationalism and a strict anti-immigration stance. Also most pundits and prediction markets figured Brexit would be voted down, much like Trump would in the Republican primaries. And we all know how both of those turned out.
The assumption has been by liberals in this country that, “Trump couldn’t possibly elected President because of [X], [Y], and [Z].” Well, the British just proved that something like a Trump presidency could absolutely happen! Factors like the markets taking a fall close to the general election or something as horrific as a terrorist attack could sway the race easily.
In other words, nothing is guaranteed. Just ask the UK.
(Photo Credit: Pixabay.com, Google Images)