Brexit Blues Continues to Permeate Markets

By Lorin McLain

Financial losses are still mounting in the fallout of the UK’s decision to leave the European Union. The Dow Jones Global Market Index showed three-trillion dollars wiped off global markets in just two days after last week’s decision. That’s far worse the previous record loss of $1.9 trillion after the Lehman Brothers collapse in 2009.

Since the days UK voters opted to separate by a margin of more than one million, ratings agencies Standard and Poor’s and Fitch have downgraded the UK’s credit rating, and Moody’s lowered the outlook of eight of 12 UK-based banks from stable to negative. The concerns range from an abrupt decline of GDP growth because of deferred business investment, and volatility from the changes in the legal and regulatory environment. The pound fell to it’s lowest level in 31 years. Markets around the world took a hit. In the U.S., the Dow Jones closed on Monday to its lowest level since mid-March, but has posted gains since Tuesday.

In an emergency session of the European Parliament on Tuesday, members booed and jeered UK Independence Party leader Nigel Farage, some calling him a liar and accusing him of using “Nazi propaganda.” Farage shot back at parliamentary members, telling them they were “in denial” and warned that the UK would only be the first of more countries that will inevitably drop out. Angry members in the session urged England to end the uncertainty wrangling markets worldwide and to start the exit process immediately.

German Chancellor Angela Merkel affirmed her commitment as the head of the EU’s biggest economy to prevent the EU from drifting apart. She said she expects Britain to maintain “close relations” with the EU, but warned it could not expect a business-as-usual approach.

Farage’s comments to CNN following the session seemed to reflect the concern of many pro-Brexit voters that the UK has no control of its own borders through EU authority, and is suffering from a flood of unregulated immigration. Farage compared Britain’s position to a hypothetical inter-government body in Mexico telling the U.S. Congress what it can and can’t pass. Referring to the border issue, he told CNN, “The problem you have in America is illegal immigration. The problem we have is legal immigration.”