Britains will soon be voting on whether to stay in the EU (the European Union) or leave. Polls are divided on exiting the EU, or “Brexit” for short. The British establishment is all for remaining in the EU but a lot of people are for getting out. Voters are being deluged by scare stories about what will happen if they exit the EU, everything from loss of jobs to depression. There has even been a claim that Britain leaving the EU will cause the climate to change even faster. Some have labeled the tactics “Project Fear.”
The issue driving Brexit is that people are fed up with an unelected European bureaucracy making important political decisions for them. People are seeing many of the decisions that were once made through Parliamentary democracy delegated to strangers in foreign capitals.
People are also becoming wary about a massive influx of refugees what under EU rules can move freely throughout Europe. People who do not share the cultural or political beliefs of the British and who have no wish to assimilate. We will undoubtedly be hearing more about this as the vote nears.
Brian Wesbury of First Trust has this take:
The bottom line is that investors should ignore scare stories about what would happen if Brexit wins. Great Britain runs consistent trade deficits with the rest of Europe. Regardless of what foreign leaders say before the vote, if the British vote to leave, the rest of the EU is going to chase them to the ends of the earth. No way will they allow one of their biggest export markets to become more distant. They will beg the UK to sign a free trade deal. In addition, and this is actually great economic news, it would free the US and UK to sign a free trade deal that the EU is now holding up.
Any market volatility would be short-lived and any swing to the downside would be a buying opportunity. Brexit is not a reason to sell. In fact, freedom is a good thing.