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How the Brexit, Britain’s Exit From the European Union, Could Affect the U.S.

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Brexit or british exit on airport sign board with blurred background. Brexit concept.
The Brexit has officially begun. (Prasit photo/Getty Images)

 

British Prime Minister Theresa May has officially begun the process of exiting the European Union, better known as Brexit, by triggering Article 50.

She also announced there is “no turning back.” As her country leaves the EU, here’s how that move potentially impacts the folks on the other side of the Atlantic:

Britain was a crucial link to the EU for America and that’s now gone. As Rana Foroohar put it in TIME in 2016:

“Britain is the main channel through which America expresses its economic and political will in Europe. Its exit from that stage will undoubtedly make it harder to assert any American agendas around trade, digital privacy, global tax reform and such in Europe.”

It’s a great time for Americans to visit the U.K. The pound’s drop in value against the dollar means it’s a superb opportunity to hop across the pond and experience jolly old England. (Indeed, bring the checkbook, as it’s a fine moment to stock up on luxury goods like, say, a yacht.)

It’s an ominous moment for American exports there. As their goods get cheaper, ours grow more expensive, leading to projections of lowered sales.

That extends to Europe in general. At the same time, Goldman Sachs has predicted the Euro will drop to parity with the dollar by the end of the year. In 2014, the yearly average saw a Euro worth .784 dollars. All of which is menacing for the trade balance with that continent.

Get ready for a great deal of potential instability in that region. The Scottish independence movement fell short in 2014. Now they’re giving it another try, with a second approved referendum. Northern Ireland may also seek to break away from the U.K. to unify Ireland and get back into the EU. Quite simply, the Brexit brings a lot of uncertainty for investors.

RealClearLife