On Friday morning I woke up and turned the BBC news on to find out that the British public had decided to leave the EU and embrace the challenges of the future as an independent country. This wasn’t a result I was expecting particularly given the last few polls had suggested a swing to the Remain camp.
The Asian markets gyrated wildly. Foreign Exchange markets fluctuated wildly with the Pound at one point at the lowest level against the USD since the Mid 80’s. The European markets opened with a bang steadying later in the day.
The media was humming with the announcement from Nigel Farage, the resignation of the Prime Minister David Cameron (who supported the stay campaign) to the Bank of England Governor announcing a standby 250 billion pound line of credit to keep financial stability. After that we had Scotland and Ireland who voted to remain in the EU requesting a separate referendum to try to keep their connection to the EU.
It has been interesting living in the UK through something I can’t help but think is momentous. The British public has told the establishment both in the UK and in Brussels, enough. Now everyone needs focus on moving forward and accepting the verdict of a vibrant democracy.
Now everyone is wondering what’s next?
This is where it gets much more tricky. But in a word “change”.
I believe whilst the UK’s economy will be affected in the short term that the UK has a bright future. Assuming the EU leadership hasn’t completely lost their minds a reasonable deal for an exit must be struck. The EUs economy is not in good shape and its struggling with a huge disparity between its member countries. The EU must change its course or else the Eurozone could suffer the long term Malaise that Japan has suffered. The EU needs to focus on addressing the rising dissatisfaction of other member countries which include, Sweden, The Netherlands, Greece, Denmark, Italy and even France.
We have entered a “risk on” environment economically as no one will be immune from the shockwaves of the Brexit vote. But the real story here is the extremely fragile, debt fuelled economic recovery the world has experienced since the GFC. Central banks globally seem to be running out of levers to pull to keep trying to stimulate their respective economies.
With the US presidential election this November, the Brexit situation playing out as well as elections in France and Germany in early 2017 investors need to be diversified, prudent and calm.
The GBA team shall provide regular updates to our customers and will always be available to either sell, purchase or store their bullion.
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