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Ramifications Of Brexit: Economic And Political Consequences

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Ramifications Of Brexit- Economic And Political Consequences

The big post-WW2 dream of the United States of Europe lies in ruins after the indecisive but binding 52% Brexit win.

This has not just affected the Britain and Europe’s fragile recovery from the 2008 market dump; it has wrecked it.

Just how temporary will this be if a save is possible at all?

It is certain to say that some emotion was involved in the pound performance directly after the results for the Brexit came in on Friday, June 24, 2016.

Foreign investors reacted predictably by having a “reject my country, refuse my money” attitude.

This can clearly be seen in the graph below which displays the steep fall of the pound against the Euro.

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  • Some of the thoughts crossing the public’s mind currently are:
  • How is this affecting the political stage in Europe?
  • How will the Euro and pound recover?
  • Will this impact the slight optimism starting to be felt after 2008?

The British Public Want A Fall Guy

To address the issue of how this situation is impacting on the global political perceptions of Europe first.

The European Union was seen on the world stage as being a symbiotic entity that flourished in the main.

The key feature of one hand washing the other in an economic and political sense was ingrained in the public’s perception of the Europe machine.

It is glaringly obvious in reading the signs communicated by the vox pop that carried the Brexit leave a vote, which the British public were front runners in declaring themselves tired of immigrants and the country’s laws being decided outside the UK.

Many who were interviewed stated that this was their minuscule window of opportunity to voice their unhappiness.

These key issues were fixed on by the Leave party brigade and the fears and prejudices of those of a nationalistic bent were nurtured.

The burning question is whether Britain can survive its chosen isolation on the political landscape, or will its sovereignty cost it any chance of short to mid-term financial, economic recovery.

Who Is Bound For Recovery First?

Moving onto the second point – Now that the Euro and the pound have embarked on different paths, will the two separate currencies experience a sudden surge in the world markets?

As can be seen in the graph below, there are already signs that the panic and precipitous fall of the pound sterling in the markets against the dollar are already improving.

 

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It is a safe bet to say that the fall of the Euro and GBP will resound on other markets.

Globally, confidence and trust in the markets have never really fully returned after the 2008 misstep.

The cautious pessimism that is being charted will possibly prevail and spread.

This move away from the mid ground snail crawl recovery from 2008 will continue the downturn.

It should not be forgotten, however, that Britain has always been the center of trade and commerce.

This is not likely to change as long as the banking hours of GMT stay so convenient for both eastern and western markets.

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Encouragement Needed

Taking the lead from the world banks by sitting back and dispassionately seeing how events unfold it is confident that the Federal Bank will keep rates low for now.

Looking at the graph below it is easy to see that the Federal Bank has encouraged recovery by keeping the rates down since 2008.

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Explaining the view of how Europe and Britain see each other is objective.

Each has considered one another essential and vital to financial and political viability for many decades.

If their policies will be divided and possibly in conflict remains to be seen.

It seems judicious at this point to remain optimistic.

Rivalries will not suddenly spring up after such a beneficial partnership.

It is the best interest of both parties to continue a financial arena that promotes the economies and politics of Europe and Britain.

The Body Politic

All depends on how the world will see a post-Brexit Britain and Europe.

Which country was the backbone of the other?

Which body structure is going to collapse or at least struggle to stand first?

Will the world see the two economies as spineless and helpless or will all efforts be made to build an exoskeleton to help them stand?

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