Euroskeptics won the day in the United Kingdom as supporters of Brexit voted to leave the European Union, rattling markets worldwide.
The consequences for global markets were sharp and immediate. The pound dropped at least 10% in value. Stocks and other commodities fell in Britain, France, Germany, and the U.S. Brexit also negatively impacted currencies throughout Asia.
The Bank of England has stated that it has prepared for the country’s exit from the EU and will be able to provide a certain level of stability. This confidence helped somewhat to alleviate the damage to falling financial stocks, but it’s undeniable the fallout from Brexit is far-reaching.
The long-term impact of Brexit on the United States remains to be seen.
The Miami Herald reports that the U.S. will probably not feel major repercussions from the decision, unless the U.K. goes into recession. One exception is Charlotte, NC, which could be directly impacted. Six hundred EU companies operate within the city, 118 of which are from the U.K.
Other consequences for Americans could actually be beneficial. Because the pound is falling, the cost of British imports to the States will likely decrease.
Interest rates on loans and debt could potentially stay low because of the Fed’s concern regarding the future of the global economy. And while stocks are falling, for those who keep their heads and don’t panic, now could be a good time to buy.
Subash Atreya of Investfly advises: “Expect to see the U.S. market continue to overreact and trade on emotion in the short term. Investors need to stay calm and stay focused.”
The significance of Brexit could be even vaster than it appears now. There is much speculation as to whether Britain’s decision will influence other EU nations to leave the bloc as well.
