Impact of Brexit on Britain and the Entire World
The Brexit is bound to have immense consequences, both positive and negative in Britain and the entire world due the power of the economy. The Brexit has already rattled its currency, bond, as well as its equity markets. The British pound is projected to depreciate by as much as 20 % against the U.S, and the euro will certainly lose value, as much as 10 % against the USD. The level of the losses will likely be short-lived, but these currencies are not likely recover fully pre-Brexit. Brexit will also dampen investment confidence, lower commodity prices and finally cause British financial market uncertainty. Together with a backdrop of slow global growth and severe concerns about China’s retardation, Brexit will cause another wave of volatility.
Slow Growth in Europe
Brexit will cause a deceleration in UK investment as well as other business activities. A similar effect is expected in the entire EU. Markets strongly associated with demand from the EU like Eastern Europe, North Africa and parts of Asia will experience a diminished demand. That would affect their industrial performance although it would not disrupt their domestic growth trajectories. As corporate leaders warm up for 2017, they will have to add more analytical energy to gaining sources of growth in other continents. That will help to compensate the weaker performance in Europe.
Global Political Risks
Brexit’s most adverse effect would be to galvanize the anti-EU sentiments and other populist parties all over the EU. That might cause a series of policy interferences in the region that might weaken the EU. That might also slow down the EU integration or even prompt other EU members leaving the union. All these would negatively affect the EU’s economic perspective, and compel multinational entities to manage political uncertainties much carefully in this formally stable region. While that is unlikely to cause ripple effects internationally, it could cause greater instability in Eastern Europe and the Middle East if it coincided with a heightening isolationist foreign policy from the U.S.
Overall, Brexit will put higher pressure on non-Europe regions to deliver excellent results that will compensate for long periods of under performance by the EU and Britain corporate entities. That will be a big challenge in the present global growth environment. It will, therefore, require a much greater focus on swift strategies. The most focus should be on high competitive positioning, proper risk management and re-strategizing of how firms plan to thrive in the emerging markets.