The Brexit was voted for, by a margin of 52% to 48%, while the polls showed a vote against by a margin of 48% to 46%. The polls were wrong. Why did the Brits vote to leave? I talked to a British neighbor a few weeks ago and he highlighted several points:
- The British are paying more into propping up failed economies like Greece, than they get from the savings of borderless economies (ie. tarriffs).
- The British are losing more blue collar jobs to cheaper countries within the EU, and more Britons are out of work, leading to high levels of discontent.
- The British borders are only as strong as the weakest border in the EU. Meaning, if immigrants can illegally cross the borders of the eastern countries, then they can enter England. These people are competing for the jobs that the Britons are losing.
- The average people were tired of the ruling political elites making these decisions for the “working class”.
All these points led to the Brexit. Our stock markets fell about 4% on Friday as a result. If you are invested in great companies, you have nothing to fear about. In about a month, this vote will be a distant memory (remember the 15% drop over the Ebola scare in October 2014?). The Brexit process will take over 2 years.
In the long run, I believe Great Britain should be stronger over it, but the future of the EU is in doubt. Germany is the main country left to pay the bills of the other failing socialist countries, and the sentiment there is already anti-EU. I can forsee the start of an exodus and the EU falling apart, leaving the United States stock market without a competitor in the world for the short-term. China and India are coming up in the rear, however.