Is BREXIT the end of the world as we know it? By Steve Marsten

By now you will have seen that the people of Britain have spoken and decided to leave the EU (European Union). This surprised the Global markets and culminated in a large sell off on Friday 24^th, June. It had a significant impact on the Aussie dollar as well which seemed to have already built in a “stay” vote occurring – like most markets had.

Let’s put this into context, the Brexit Vote represents a protest vote in Britain. Their people protested against the surging immigration problem, The Bankers of London and then the EU. Most of the leaders of the largest parties including the Conservatives and the Labour Party, supported the “stay” vote however the non-conventional populists like Boris Johnson (the former London Major) lead the “Leave” vote and the people sent a message to their regular political leaders.

Many in Britain want Australia’s policy on immigration. Australia’s resettlement program through the office of the United Nations High Commissioner for Refugees (UNHCR) is the highest per capita globally. That said, we have strict policies and processes that controls the levels of immigration. The EU has yet to devise strict policies of limitation as yet. What we sometimes don’t realise is the huge impact the EU is currently feeling with the mass migrating of peoples from the Middle East.

Either way, it’s not for me to comment on whether it’s right or wrong however, the impact of Britain’s support to leave the EU, will have economic consequences for Australia. On the one hand it leaves Australia in a position to obtain a “free trade” agreement with them and we should be the first to knock on that door. On the negative side, we will lose an ally within the EU however one could wonder how much pull one state actually would have in the EU. 

Markets will thus be rocky for a little while before they realise that it’s actually ok for the UK to go it alone. Let’s not forget that Britain is the 5^th largest economy in the world and not one to be overlooked in the scheme of things. The markets will settle down again and continue focusing on the real economics of the Global economy. For more information feel free to call us at Sothertons

on 4972 1300.