Should the United Kingdom (UK) remain a member of the European Union (EU) or leave the European Union? That is the very question that will be put to UK voters on June 23. It’s a big question that will inevitably invite a big answer for the capital markets.
The decision by UK voters to stay or go might not strike US investors as being all that significant. On the economic surface, it isn’t. In 2015 goods exported to the UK accounted for less than 3% of total US exports.
Now, there might be some real relationship friction between the EU and the UK if the majority of voters choose to leave the EU, yet it’s safe to say that the trade relationship between the US and the UK won’t be impacted to such a degree — if at all – that it would have a meaningful impact on US GDP growth.
The latter point notwithstanding, a majority “Leave” vote could be quite significant in the short run for US investors.
Two Sides to Every Story
At the heart of the voting matter for UK citizens is a cost-benefit analysis. Is the benefit of being a part of the European Union worth the cost of its bureaucracy and political mandates?
There are reasoned arguments on both sides of the matter about trade dynamics, defense, sovereignty, cultural identification, and immigration control.
This post was published at FinancialSense on 05/24/2016.
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