Brexit – Waters Uncharted




Brexit waters are uncharted, so the first thought is that no one can possibly know the final outcome.

Some further thoughts:

  • The effects on the US should not be major or sustained.
  • UK itself will probably have a short recession, but not a big long-term dip.
  • Europe will have to re-think its non-economic integration.
  • Russia and China, while emboldened, will likely see few gains.
  • Markets, while initially down, will likely recover within six months or so.
  • London, as a financial center and as a repository for foreign money, may well face the biggest upcoming tests.

This last point, while not crucially important to anyone else, may be the most significant. Not because London’s role as a center of finance or money laundering is crucial to the world economy — it is not.  Rather, because the Brexit vote reflected similar patterns elsewhere that could have a continuing major impact.

These include:

  • A rural-urban divide.
  • A generational divide.
  • Rebellion by working-class folks who feel government, financiers and globalization have failed them.
  • Anti-immigration sentiment — or at least heightened debate over who and how many immigrants to let in.
  • A threat to the direction public and private elites have been headed.

These issues are major.  Centrifugal forces are pulling Western countries apart.  Things that have been taken for granted, like expansion of individual autonomy, or multiculturalism versus the traditional concept of the melting pot, and free trade, will have to be faced squarely.

Indeed, the question of “national character,” or even of whether countries like the UK, Spain, Belgium and Italy should each be split into two or even three smaller countries, will need to be dealt with.  Scotland’s pro-EU vote is a leading indicator.

These are amazing days.  Unfortunately, many of the emerging actors will be demagogues or even Fascists, whose shrillness will make rational discussion of  these vital issues very difficult.

“May you live in interesting times” goes the old Chinese proverb.  We do.  Let’s just hope the Brexit vote doesn’t herald an era of “too-interesting times.”

Richard Levy, HBD’s President, travels to the UK several times annually.

2 thoughts on “Brexit – Waters Uncharted

  1. The Brexit vote really is a lot to do about nothing. The EU isn’t that old since the UK didn’t formally join until 2004. Also Britain is just the first as Norway and Italy will soon follow. Financially things will not change much. Germany and France will threaten and posture and then continue on as normal as Britain is important to their economies. Britain’s economy was strong before joining only saw stagnation and declines and suffering from the decisions made in Brussels that always favored Germany and France. Before joining Britain always had liberal immigration policies but they could document immigrants. Brussels’s open borders policies has made Britain a dumping ground for trouble which is blatantly ignored by Brussels and the western press. I realize I don’t have the knowledge that somebody who travels to Britain a couple of times a year staying a few days each time. I’ve only lived and worked in the UK for 12 years.

    1. Dear Carl,

      Thanks for your thoughtful response. Actually, I do not think you and I disagree too much. I think I said that the financial aspects would not be very long lived. I tend to think the negative effects are being overblown. I think we all hope so.

      I also pointed out that the main effects would be with other people who might want out. I do not believe we differ there either.

      I do not pretend to be the Nostredamus of Brexit. But I do have a little more access to information than the UK than you give me credit for: I go over 5-6 times a year, have friends in politics and academia, and have business interests in the US. This does not make me any sort of transcendent expert on Brexit, but I hope it gives me enough insight to explain to cursory followers of the debate what it is about and what it is not about.

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