No need for Brexit panic
Sterling has plummeted. London's stock market is in free fall, and investment is on hold. Prime Minister David Cameron has announced his intention to resign, and the main opposition Labour Party is in turmoil. To listen to some of the more hysterical commentary, Britain has been plunged into perpetual crisis with its decision last week to leave the European Union. It won't be long before the British are appealing for food parcels, and the Red Cross is raising emergency funds across the world to rescue the beleaguered island.
Ignore it. In fact, Britain is a big enough country to do just fine outside the EU. Its economy will bounce back very quickly, and it will see little loss of international stature. Brexit may well be a mistake, but, rather like heading out of the house on a cloudy day without your umbrella, it will be one more of carelessness than anything else. Within five years we will have forgotten what all the fuss was about.
In the markets, Brexit is being treated as a cross between the collapse of Lehman Brothers and the start of World War III. In truth, that says more about the hysteria of investors than anything else. Britain accounts for about 3.5% of global output. Its exports to the rest of Europe account for about 14% of its GDP. So even in the worst-case scenario, in which British goods are completely banned from Europe, we are still only talking about less than 0.5% of global output. That is a rounding error. What possible difference it can make to Samsung or Apple it is hard to say.
Actually, though, Britain's economy is fundamentally strong, and will bounce back quickly. The devaluation of the pound will strengthen its exports, and make sure its companies can easily overcome any tariffs that might be imposed in Europe. If demand dips, the Bank of England can still cut interest rates or launch another blast of quantitative easing. The United Kingdom's real strengths these days are incredibly flexible labor markets, one of the highest rates of entrepreneurship in the developed world, and the lowest corporate tax rate of any major economy, all of which have made it a magnet for inward investment.
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In reality, Britain's standing in the world had relatively little to do with its role in the EU anyway.
http://www.cnn.com/2016/06/28/opinions/brexit-overreaction-lessons-lynn/index.html
Wonder if he is right.
Sterling has plummeted. London's stock market is in free fall, and investment is on hold. Prime Minister David Cameron has announced his intention to resign, and the main opposition Labour Party is in turmoil. To listen to some of the more hysterical commentary, Britain has been plunged into perpetual crisis with its decision last week to leave the European Union. It won't be long before the British are appealing for food parcels, and the Red Cross is raising emergency funds across the world to rescue the beleaguered island.
Ignore it. In fact, Britain is a big enough country to do just fine outside the EU. Its economy will bounce back very quickly, and it will see little loss of international stature. Brexit may well be a mistake, but, rather like heading out of the house on a cloudy day without your umbrella, it will be one more of carelessness than anything else. Within five years we will have forgotten what all the fuss was about.
In the markets, Brexit is being treated as a cross between the collapse of Lehman Brothers and the start of World War III. In truth, that says more about the hysteria of investors than anything else. Britain accounts for about 3.5% of global output. Its exports to the rest of Europe account for about 14% of its GDP. So even in the worst-case scenario, in which British goods are completely banned from Europe, we are still only talking about less than 0.5% of global output. That is a rounding error. What possible difference it can make to Samsung or Apple it is hard to say.
Actually, though, Britain's economy is fundamentally strong, and will bounce back quickly. The devaluation of the pound will strengthen its exports, and make sure its companies can easily overcome any tariffs that might be imposed in Europe. If demand dips, the Bank of England can still cut interest rates or launch another blast of quantitative easing. The United Kingdom's real strengths these days are incredibly flexible labor markets, one of the highest rates of entrepreneurship in the developed world, and the lowest corporate tax rate of any major economy, all of which have made it a magnet for inward investment.
/
In reality, Britain's standing in the world had relatively little to do with its role in the EU anyway.
http://www.cnn.com/2016/06/28/opinions/brexit-overreaction-lessons-lynn/index.html
Wonder if he is right.