If you are unfamiliar with what has transpired last week in the United Kingdom regarding its stance in the European Union, then I'm glad you came to read this. The term “Brexit” refers to the combination of the words Britain and exit. If you find yourselves wondering what on Earth could they possibly be exiting from -- the world? --Thankfully, no. The UK referendum of 2016 was held on June 23 asking voters, “Should the United Kingdom remain a member of the European Union, or should they leave the European Union?”
Historically, the last time the UK had a referendum was in 1975 -- this was also known as “Common Market referendum.” Obviously, the vote sided with those who wanted to stay in the EU. However, during the general election of 2015, where Prime Minister David Cameron ran to be re-elected, he had promised if he was, that he would hold another referendum to vote, in or out.
So, then it came time for him to live up to his promises, and the results ended in the vote to exit the European Union.
Now you may be wondering, why should I care? I live in the U.S. This has no impact on my life. Well, for some it may not, but for others it does, and in a very big way.
The most important effect Brexit will have, will be on our economy. Brexit can either allow our economy to remain stable or make it decrease significantly. Recently, it has been reported prior to the exit that the leave will cause a very large decrease in the stock market and will affect millions, but we have been promised that it will only be for a short period of time. However, if the Federal Reserve is already increasing interest rates, it doesn’t seem like they have a very positive outlook for our economy regarding the next few months.
Retirement will also be be affected due to the dip in the stock market. According to The Washington Post, about half of America’s full time employees have invested into their company’s 401(k). Those investments can be exposed to the turmoil the market in the UK will be facing.
Finally, the exchange rate has fallen dramatically between the U.S. dollar and UK. Since last Thursday night, it fell a rough eight percent within hours of the announcement. A few days later, June 25, it was at the lowest it has been in years, $1.37. This is devastation to the economy in the UK. However, if you are looking to travel to say, London, this is probably the most economical time to do so. Unfortunately, my family and I missed this opportunity, as we traveled a year ago, across the pond, when the rate was eight percent more than what it is now.
FYI -- I wish I was reporting this to you from this beautiful and fascinating country.
