Slow Catastrophic Impact of Brexit on a Larger Scale

Not many odds makers or financial experts foresaw the potential exit of the United Kingdom from the European Union. Consequent reactions in the market were slow, swift, but many drastic factors  surprised many.

Brexit impact

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Financial markets are expected to take a period to adjust to the changes, but face possibilities of falling into an entirely new avenue or vector of geopolitical and macro economic uncertainty. Similarly, this slight change in the economic landscape is expected to cause various effects in not just in the European market, but also in the global perspective.

It is important to state that there is no specified strategy to follow, or ideology to implement as a guide for how the decision to leave the European Union will grow in the future or days or months to come.

Shift in the Regional Capital

In a result that would see British citizens experience lower market interest rates and increasing currency values, Britain’s regional capital will shift from the region. The said amount of capital will most likely fall in the hands of safer markets such as the United States and to Japan treasuries.

Higher U.S dollar and Japanese Yen

Another effect that the economy is likely to go through is increased currencies from the world’s leading economic regions. The regions are notably two, the Japanese and the United States. An increase in the yen and in the dollar respectively, will hinder further efforts to re-energize the economy after ten years of deflation.

Raising the level of intervention by the European Central Bank

The European Central Bank will yet again be subjected to the pressure of raising sanctions yet again with the continued increase of risk premiums. Countries in Europe which face future challenges from such a move are Germany and Italy. For example, Italy which is in a specifically vulnerable position-now made a notch more vulnerable. Similarly Germany’s economy will deteriorate further after because of increased outperformance. At this juncture, it is clear that any small negative change to Euro zone members is a contributing factor to the struggling economies expected in the coming months.

Possible collapse of the Euro Zone

The whole European region faces drastic fractures in the pillars that hold it firmly together. Some transformations are likely to be felt, and although not as early as next year, but before the next decade. A factor that supports this theory is paying respect to the Euro zone macroeconomic forces. However, the social and political potentials in the environment broaden the aspect of the reality behind economic potentiality.

Conclusion?

The mentioned individual elements collectively form the base of our global case study or scenario. British citizens should remember the catastrophic effects that are felt after an unexpected shift in the economic patterns. For example, we are now marking the seventh year after the Great Recession of 2009, a time which saw a contracted global economy. It will be interesting to observe how the European community and the global market will fair during this tough economic time.

The referendum Brexit vote has raised a lot of different tensions and opinions. Was the move by the British Parliament a necessary evil or was the motion propelled by spite on the political regime of the time? Will other countries choose to leave the European Union too after the move by the United Kingdom proves to be a success?

 

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