What The Brexit Means For The U.S. And The Rest Of The World
Britain shocked the world by voting to leave the European Union Thursday. Prime Minister David Cameron announced his plans to resign because of the news, telling reporters Friday: “I do not think it would be right for me to try to be the captain that steers our country to its next destination.” Now, many are wondering what the Brexit means for the U.S. and the rest of the world. Yes, the U.K. is far, far away, and America isn’t apart of the EU, but Britain’s decision will have major repercussions across the globe.
First of all, the global stock market is already seeing effects from the vote. The British pound dropped to its lowest value since 1985 as the nation voted to leave the EU, and world stocks dropped by more than $2 trillion Friday morning. Long-term effects on the market aren’t totally clear, but a decrease in the pound’s value would likely lead to the U.S. dollar shooting up in value. While the change in dollar-pound exchange rates would favor Americans, it could complicate American trade and exports.
Most people’s retirement plans are invested in the stock market, so major changes to the market could affect your 401(k). Things will probably settle down soon enough, but you might see some drops in your retirement fund in the mean time. Many economists have advised people to not panic and call their financial advisor if they’re really worried.
For American homeowners in particular, the upset to the global economy could keep the Federal Reserve from upping interest rates again, which means U.S. mortgage rates will remain low and potentially drop even more.
It will take Britain about two years to officially leave the EU, so citizens of other European countries and the U.S. living in the U.K. won’t see any immediate changes to their residency status. A major driver of the Brexit movement was opposition to immigration, as the percentage of migrants moving to the U.K. from other parts of Europe rose from 25 percent to a little under 50 percent from 2004 and 2014. Leaving the EU means Britain will come up with new immigration rules, and people from EU members states could have to go through the immigration process non-EU citizens currently go through to live in Britain, but it depends on what agreements the U.K. and EU strike up. If the ease of hiring Europeans is taken away, it could become easier for Americans and people from other non-EU member states to get jobs and visas in the U.K.
Changes in immigration policy will also have huge affects for refugees fleeing to Europe from other parts of the world. The EU requires member states to accept refugees from other member states, so Britain could put a cap on the number of refugees its willing to take in. This would ultimately force more refugees to stay in less economically viable European countries.
Because Britain isn’t apart of the Schengen Agreement that allows people to move freely through other EU countries, travel to and from the U.K. shouldn’t be any different for any one not trying to move to the nation.
A lot depends on how the U.K. handles the breakup and what issues it’s willing to compromise on. Just like splitting with an unpredictable partner, we’ll have to wait and see how Britain will handle the situation.