I’m an optimistic guy, so here are my 5 reasons why the Brexit vote might not have such a massive impact.
If you agree with me, then please share on social media with your buddies…
What does a vote “Leave” actually mean
We voted to leave the EU.
Not to reduce migration, not to increase sovereignty, not to stop wasting money (£350m per week) on EU government departments. We didn’t elect Boris Johnson or Nigel Farage into power.
If we leave the EU, the referendum result will have been actioned. That is all that has been asked for. The levels of migration or sovereignty were not part of the vote.
So aside from the trade deal, not much necessarily needs to change.
We still have the same number of businesses, delivering the same goods and services to customers in the UK, the EU, and elsewhere. The quality of these businesses (good or bad) has not been impacted by the vote.
We still have the same number of schools, hospitals, fire stations and police cars as we did pre-Brexit. We still need all these organisations, who provide jobs for UK citizens.
Britain is still Britain under the bonnet. The deficit is as big as it was yesterday. The England football team are probably going to go out of a major tournament on penalties…
Likely deal with EU on similar terms?
You might have read my blog on the relative size of our export and import markets, but if you haven’t, then it explains how roughly 50% of all imports and exports comes from, and goes to the EU respectively.
The size of trade between Britain and the EU means a deal will be struck for the benefit of both sides. German and French companies will want to sell cars to UK customers. UK financial service organisations want to trade with EU customers.
From what I’ve heard, the terms of the trade deal may well end up looking similar to the pre-Brexit deal (freedom of movement and trade).
If this is the case, then we’re in a similar place we were before…
Market adjustments are short term
Everyone is rightly worried about the value of sterling, and the impact on the FTSE. A devalued pound means we pay more at the pump for petrol, and the cost of our imported products go up. This can lead to cost inflation, with no offsetting salary inflation (ie less cash in the bank at the end of the month).
However, these adjustments are paper based adjustments, based on perceived risk and value. Part of the reason for the mini-crash was an expectation of a remain vote, which led to strengthening of the currency and commodities pre-vote, which obviously reversed after the leave vote was delivered.
The short term market adjustments will (in my opinion) reverse over time, as they are generally based on the underlying fundamentals of an economy or market.
It could take ages to agree a new deal
The new deal with the EU could take years to iron out. During this time we are still a member of the EU, so actually nothing will change.
Yesterday I wrote a blog about the need for calm in the aftermath of the vote to leave. In my opinion we should take our time and not rush to any decisions or strategic plans.
So you could say that not much has changed. The result feels seismic, but if you look a little closer there is definitely room for a little cautious optimism for those who voted remain, even though we are going to leave.
And whatever happens, good luck!