Brexit ripple effects create turbulence on Wall Street
Britain | Stocks tumble after unprecedented decision, but supporters don’t expect longterm downturn
by Ciera Horton
Posted 6/24/16, 05:15 pm
WASHINGTON—Britain’s decision to leave the European Union (EU) after a historical referendum has wreaked economic havoc and divided politicians on Capitol Hill.
Just hours after the announcement of the narrow vote—with 52 percent in favor of leaving the EU—oil prices tumbled and the pound dropped to a 31-year low. The outcome shocked investors around the world as London’s stock exchange index dropped $164 billion in the first 10 minutes of trading. By the close of trading on Wall Street today, U.S. markets had suffered their worst loss since August 2015.
But the decision’s immediate economic repercussions don’t reflect the likely long-term consequences, supporters say.
“I do think economically it’s probably a good decision for Great Britain,” U.S. Rep. Mark Meadows, R.-N.C., a member of the House Foreign Affairs Committee, told WORLD. “The real danger is, if other countries that are stronger economically pull out, then we’ll see the unwinding of the European Union.”
Before the vote, Sen. Lindsey Graham, R.-S.C., criticized the EU for becoming a regulatory organization, even as he expressed hope British voters would stick with the union.
“It’s got a lot of British people turned off,” he said. “But I don’t want them to leave because in our national security interest, it’s better for Europe to be whole than it is to be segmented.”
Britain is now the first major country to depart the EU, which was created after World War II as European countries sought economic unity. It’s unclear what further economic repercussions will happen in the following months.
Analysts say Brexit could spark a dangerous domino effect threatening the stability of the EU. German Chancellor Angela Merkel has called for unity, stressing the “need to make sure the European people feel that the EU wants to improve all our lives.”
But Dutch politician Geert Wilders called for a similar referendum regarding the Netherlands’ role in the EU. France’s National Front leader, Marine Le Pen, is also urging the French to leave the union.
U.S. President Barack Obama and presumptive Democratic presidential nominee Hillary Clinton had urged British voters to remain in the EU for the sake of European unity. In the lead-up to the vote, Obama said “Britain is at its best when helping to lead a strong Europe” and warned the U.K. would become at the “back of the queue” for trade deals should it choose to leave the EU.
But today Obama said Britain’s decision will not affect the relationship: “The United Kingdom’s membership in NATO remains a vital cornerstone of U.S. foreign, security, and economic policy.”
Presumptive Republican presidential nominee Donald Trump supported the campaign to leave and applauded voters for “taking back” their country.
“They’re angry over borders, they’re angry over people coming into the country and taking over,” said Trump, who was in Scotland for the grand opening of one of his golf resorts. “They took back control of their country.”
Ciera Horton is a World Journalism Institute graduate and former WORLD intern.