YOUNGSTOWN, Ohio (WKBN) – Voters in Britain have chosen to leave the 28-nation bloc of the European Union. Leaders in other countries are calling it a crushing decision.
The British vote, or Brexit (British exit), is considered a political earthquake that will shatter the stability of the continental unity forged after World War II, but what will the immediate effect be on the United States?
“This is a big deal. This isn’t a small issue and it’s important, and it’s significant to our country and the dialogue that’s going on in our country,” said Northeast Ohio Development and Finance Authority Anthony Trevana.
Oftentimes when there’s some sort of government turmoil in another country, it doesn’t usually have a direct impact on Americans but there are some ways the Brexit could change things here in the U.S. It could be a great opportunity for those looking to invest.
Right now, mortgage rates are at the lowest level in years, and that all happened just over the past few weeks as the fear of Brexit became more of a possibility.
Since the accounts are long-term investments, experts say investors shouldn’t rush to make any changes to their portfolio.Many people woke up this morning not knowing this could have an impact on their retirement plans as well. Retirement 401K accounts could face some stock market turmoil. About half of American’s have a 401K.
The Fed was expected to raise interest rates this year after doing it back in December, but they haven’t done it yet. Now rates are expected to go even lower.
As far as vacations, the Brexit could be a good thing for Americans. The exchange rate has gotten better as Brexit got closer. The pound is worth about $1.48. About ten percent of tourists in Britain last year were Americans, and they spent more than any other nationality.
Dave Bizanich, Director of the Youngstown Finance Department, says any long-term effect Brexit could have on Youngstown is unknown. He thinks in the next few months it will help the city by lowering its borrowing costs and allowing it to issue debt at the low cost.
“We really believe this presents an opportunity out there. If earnings are strong, that’s what matters in the long run,” said financial advisor Todd Bury.
Trevana says when the markets declined and crashed between 2008 and 2010, mutual funds and stocks did eventually recover.
“Markets do correct themselves. It’s all about how comfortable people are with staying in.”
Experts say the best thing to do is remain calm and ride out this dip in the market.
“Don’t get emotional. You can’t get emotional in investing. Really, if anything, I actually see this as an opportunity,” Bury said.
Overnight, British Prime Minister David Cameron announced he’s resigning after the historic vote. He wanted to stay in the union and President Obama supported his decision.
With the vote to leave the union winning with a 52 percent majority, that means nearly half wanted to stay in the union and many are calling the move a sad situation.
Annie Cochran is an American citizen living in Manchester, England. She described the mood there in a neighborhood where she says 60 percent voted to remain in the EU.
“While speaking with locals today, I only saw and heard outrage, sadness and shock. When divisive and hateful rhetoric is allowed to play its part in politics, we are left with disastrous results.”
It could still take at least two years before any of the new policies go into effect, even though the vote is already being felt all across the world.