On June 24, Britain announced that it would exit the European Union (EU) with a 51.9% majority vote and created a ripple of uncertainty in the global economy and financial markets (CNN Money). After the vote, Moody’s Analytics reported that the UK economic output would drop 4% in comparison to the global decline of .25%, while the pound reached a 31-year low (AP 1). Companies such as JP Morgan began discussion over moving operations to the European mainland due to London losing its power as the central bank for European business (AP 1). Ireland, a nation where Britain rules the North, faces the most potential damage to its economy, security, financial markets and trade if Parliament also approves of Britain’s exit (Reuters 1). Although the decision occurred in Europe, the economic effects are being felt around the world. Nations like Mexico have seen a decline in their currency value and have had to further raise interest rates (Reuters 2).
Jens Stoltenberg of the North American Trade Organization and Christine Lagarde, managing director of the International Monetary Fund both agreed that the UK and EU would need to cooperate to ensure international peace, security and economic stability (BBC 1). Since Prime Minister David Cameron stepped down, the activation of Article 50 will be up to his successor and could potentially lead Britain down four different paths to leaving the EU (BBC 2). Other countries, including France and the Netherlands, have announced plans to discuss referendums since Britain’s vote (AP 2). Britain’s exit from the EU, a member bloc that has created prosperity and growth since World War II, generates concern in a global economy that has an already low forecasted growth rate of 2.4% (AP 2).
Tags: Global Economy, EU, UK, European Union, Britain, Field, Brexit