A television screen on the floor of the New York Stock Exchange shows the closing number for the Dow Jones industrial average, Friday, June 24, 2016. The DJIA dropped 611 points, or 3.4 percent, to 17,399 in heavy trading Friday. Stocks plunged in the U.S. and worldwide after Britain voted to leave the European Union. (AP Photo/Richard Drew)
By Rachel Uranga, firstname.lastname@example.org, @racheluranga on Twitter
Posted: 06/24/16 – 7:31 PM PDT |
Britain’s exit from the European Union shocked markets, reshuffled alliances and created a new political reality that experts say will be felt in Southern California.
From the hedge funds set in downtown skyscrapers to the nondescript manufacturing facilities scattered along local freeways, the fallout of Thursday’s vote and the threat of further fragmenting within the European Union will be broad.
“Our jaws dropped,” said Stephen Cheung, president of World Trade Center LA. “We are terrified of the potential consequences.”
Last year, the United Kingdom was California’s 10th largest export destination, with more than $5 billion in products heading to Britain. But the exit, which will still take years to implement, rewrites the rules of the game for those doing business abroad. “Nobody knows how, that’s the scary part,” Cheung said.
The consequences of the vote played out on the world stage, causing turbulence in financial markets and raising the specter that other countries could leave the 28-member European Union. While most analysts expect the immediate turmoil to subside, there is fear the United Kingdom could slip into a recession and weaken the European economy.
Meanwhile, the British consulate in Los Angeles is trying to calm uneasy investors.
“There will be no immediate changes in the way U.K. goods can move or the way our services can be sold,” said Chris O’Connor, British consul general in Los Angeles. “As the prime minister said this morning, we would reassure investors that Britain’s economy is fundamentally strong and we are a great trading nation.”
Prime Minister David Cameron, who backed the movement to stay in the EU, said he will step down in October to allow “fresh leadership” to lead the nation on its new course.
The most immediate impact consumers can expect to feel will be cheaper European vacations and a shaky financial marketplace. U.S. markets closed sharply down the day after the vote.
“The stock market has real pocketbook effects as well as psychological effects,” said Sung Won Sohn, an economist at Cal State Channel Islands. “People don’t buy houses, people don’t spend at expensive retail stores when the stock market is doing poorly. Home sales, car sales, retail sales will all see some effect.”
“Long term, we are going to see economic slowdown in Europe and the U.K.,” he said. “When their economic growth slows, they buy less from us, including IT companies and technology products.”
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