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What is happening with Brexit?

Where does Brexit stand and will it affect you in anyway? In June 2016, over 30 million U.K. citizens made their way to the polls to vote on whether or not Britain should withdraw from the European Union. It was a move that was facilitated and led mainly by the current members of the opposition, the Labour Party. The results of the nationwide referendum was 51.9 per cent to 48.1 per cent, the majority voting to leave. There was an approximate turn out rate of 71.8 per cent.

These results were not what many citizens, or even members of parliament, expected, including that of the Prime Minister at the time, David Cameron, who resigned after the referendum.  Theresa May, the former home secretary, took his place. In the beginning, she was against the results of the vote, but changed her mind and moved ahead with Brexit talks after determining this is what most of the citizens wanted.

It’s been over a year since the decision was made. Talks commenced on June 19, 2017 and so far the UK is scheduled to leave the EU at 11pm on Friday, March 29, 2019. There are currently discussions taking place on how exactly Brexit will work and what this means for British citizens inside and out of the country, especially those living in EU member states.

Britain joined the EU, or European Communities, in 1973, along with Ireland and Denmark. In a mere 40 plus years of relations, the withdrawal will mean a lot of changes. The European Union is basically an economic and political agreement between 28 member states in Europe. It is a single market that encourages seamless flow of trade, work, and studies for member states. In a move to withdraw from the EU, one of the major changes will be a tightening on immigration. EU members will not be able to come and go as they please. This decision was highly criticized and was thought to be one of the main reasons why the UK, mainly England, wanted to leave.

Under article 50 of the EU agreement amongst member state, it says there must be two years of negotiations after giving notice of their request to withdraw. Both sides have to agree to the terms of the split. Once a deal is met, it will be presented to the members of council in the remaining EU states for approval. The deal needs to be approved by at least 20 out of the 27 remaining countries. If Britain does leave the EU in 2019, it is said they will seek a new customs and trade agreement with the rest of Europe, and EU law would no longer stand in the UK.

Scotland and Northern Ireland have, however, voted to remain in the EU, with Scotland’s Prime Minister calling the move democratically unacceptable. This is causing questionable friction within the member countries of the United Kingdom.

As a British citizen myself, I am concerned about the changes that will take place and what this will mean for residents living outside of the UK when it comes to emergency medical care, work, and study travel access. The UK has said they hope to keep visa-free travel in place for British citizens and EU members after Brexit, but there is no solid guarantee. If this is not the case, this can mean several years of permissions and proposals and increased costs.

In 2019, there should be a clear view of the terms of the exit. The framework for withdrawal will need to be approved by parliament, but another referendum could throw everything into chaos. However; May has strongly declared there will be no second vote.

What are your views on Brexit? Comment below

Brexit vote causes loonie and pound to plummet

The Brexit vote has caused the loonie to plummet and has left many Canadian stockholders running. Britain’s decision to leave the European Union has upset the global market greatly due to the unprecedented nature of this event.

The Canadian dollar dropped to $76.28 cents US, after initially dropping $1.37 US on Friday and dropping another $0.65 cent US on Monday. This is a substantial currency loss and has put the TSX stock market into a frenzy. The Canadian dollar is expected to continue dropping to approximately $ 0.74 cent US over the next three months due to turmoil in the market over the uncertainty surrounding the Brexit vote. At the same time, many financial experts are expecting the market to re-stabilize because market overreaction is a typical response when a great global shift occurs.

Britain’s vote has left Canada in a precarious economic position as well, as our country has strong trade relations with Britain. Though many financial consultants are stressing that the market will stabilize, others are concerned for the future of the North American market. Canadian and U.S markets rely on Britain as a primary communicator to the EU for trade relations.Without this point of contact, trade relations may become more difficult as the British middle man pulls out of the EU. The free trade agreement between Canada and the EU called CETA has already seen resistance from other European countries since Brexit.  London is also the base for Canadian banking operations and this decision may put them at risk.

Another concern is what will happen to British stock portfolios when the country separates from the EU. The EU passport that accompanies several stock portfolios in the country create higher value when considering trade options. Without unlimited access to the other countries in the EU, people are looking to sell their stocks. When the market falls out of balance with panicked stockholders looking to jump ship, it becomes threatened and could cause further instability to the market.

Before the vote occurred on June 23, the British pound was trading at $1.50 US. The pound now stands at $132.40, a 31-year low for the country. The severe drop of the pound is causing reverberations throughout England and it is unclear whether recovery will be possible once they leave the EU.  There are rumours circulating that the Bank of England will soon cut interest rates to try and help stabilize the market. Cutting interest rates would help lower costs to investors while their stocks plummet, but will not be enough to restore the pound to its pre-Brexit value. The Royal Bank of Scotland had their shares halted after declining 15 per cent, and the Euro dropped six per cent as well.

Other “glass-half-full” investors urge Canadian to buy the cheap stocks while they are hot, as panicked stockholders will sell cheaply when the economy temporarily drops. The TSX market was down a whopping 210 points to 13,681 in the afternoon on Monday, reflecting that Canadian stockholders were panicking. Bank stocks swung the market heavily because they dominate the TSX stock market, and are easily affected by global impacts.

Another potential plus is the impact on the US economy. Wall Street experienced its worst day on the market in the last 10 months and this might push the US Federal Reserve to delay increasing interest rates as previously planned. This would be helpful to the Canadian economy as it would make stock options cheaper in the US, but could potentially continue to drive housing prices upwards due to low interest rates in both countries so it is difficult to foresee if this is positive or not for Canadians. The Brexit vote also creates a more nationalistic tone in global trade relations and could hurt the potential for the Trans-pacific Partnership, an important trade deal for Canada.

One of the reasons that British citizens opted to leave the EU was to help their economy. It was argued by Brexit supporters that the taxes demanded by the EU were too high, and maintaining a private economy would be more profitable for the country. The plummeting pound and unstable British market has clearly proven otherwise. Leaving the EU will weaken the British economy tenfold and leave it without valuable EU trade partners in the global market.

This EU exit is unprecedented in history and its impacts to the future are unknown — but clearly it will be dark days ahead for the British economy.