The economy is a precarious element, so when history-making political decisions like Brexit are made, the rest of the world is often left to deal with the ramifications. The question remains: now that Great Britain has voted to leave the European Union (EU), what does it mean for the U.S.?
The Investment Aftermath
After the vote was confirmed, it appeared that another financial crisis was just around the corner. Global equity markets plummeted as media began non-stop coverage of the event. During the panic, standard financial “safe havens” like U.S. government bonds, gold and the U.S. dollar were sought after and the U.S. was flooded with investments. Fortunately, world markets recovered quickly and continue to hold strong.ttp://www.latimes.com/business/la-fi-economic-expansion-20160606-snap-story.html
Fed Interest Rates to Hold Steady
Representatives from the Federal Reserve Bank brought more good news with their decision to further delay an interest rate hike. The delay of the interest rate hike by the Fed was to combat current market uncertainties. Many raised concerns that an interest rate hike could have a domino effect will begin with other European countries leaving the EU, so erring on the side of caution will provide stability in the interim. A delayed interest hike will help with real estate, infrastructure and with any other investment where people need to borrow money. Low interest rates usually equates to more money flowing throughout the economy overall.
Positive Trade Relations
Because the United Kingdom is our seventh largest trading partner, a new deal with Great Britain will have to be worked out. Now that Great Britain won’t have EU restrictions, they will be able to make decisions on their own which (we can assume) may benefit both parties, as our countries have always shared positive ties. Great Britain and America are both advanced, highly developed industrial economies with skilled workforces, so the streamlining of regulations and the removal of obstacles to trade would in theory, over time, increase the volume of goods and services exchanged.
A Better Exchange Rate
Dollars, pounds, euros and yen — no matter the currency, we all want to make the most of the money in our bank accounts. Particularly when travelling. With Brexit in place, travel experts say now is the time to visit friends across the pond. Now that the pound’s exchange rate is cheaper, England is more affordable than it has been in years. Simply put — you will quite literally get more bang for your buck.
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