Brexit

From the reaction of people over Brexit one would think that the world is coming to an end.  After a short period, maybe 2 to 5 years after the withdrawal, Britain will easily be outperforming most European countries.  The following is why we believe Brexit is nothing but a small bump in the road for Britain. 

• The British pound is the world’s oldest currencies and still one of the safest. In over 400 years the pound never was devalued.  It has always traded based on market forces.  Against popular opinion, we believe the pound is safer than the U.S. dollar.  The dollar will one day collapse due to the country’s out-of-control debt and its dysfunctional government.  In the past, not one currency has survived such politics and reckless spending.

• People from all over the world will continue to buy London real-estate and move some of their wealth to London.   It is one of the safest cities in the world.

• Some sort of agreement between Britain and the EU will be formed, something similar to what Norway and Switzerland have today.  Once Parliament presents the formal notice to withdraw, Britain has 2 years to fulfill its obligations.  Many agreements will be formed regarding trade, banking, immigration and travel. 

• You never avoid a rich country with over 80m people.  There could be a slow period until formal papers are signed, but Britain will remain a top trading partner.  Only morons would stop trading with Britain.   

• For Canada, Britain is a gift to sell our natural resources, especially natural gas.  Unfortunately, for the next four years, Ottawa and Alberta will do nothing to grab this market.  American will quickly grab it from us until PM Heart Throb is replaced.  

• Banks will not leave Britain.  The market is just too big, earns lots of money, English speaking, and foreigners prefer London to other European cities.  

• Business around the world will continue to slow as long as zero interest rates can dig the economy into a hole.  Much of this slow-down will be blamed on Brexit even though there will be no correlation. 

• London will remain one of the largest tourist destinations in the world and the birthplace of Rock.   

A few negatives might be: 

• Europeans will now make a mad dash into Britain before the 2 years are up.  This could create further political issues for both Britain and the EU.  The country has prospered because of immigrants from all corners of the globe.  Once these 2 years are over, Britain’s population growth may fall. 

• There will be so much time wasted on setting up new trade deals, international treaties, and most likely a new bureaucracy to arrange these deals.   

• Due to the vote, chances are there will be no interest rate increase until late 2017.  

• Bureaucracy in Brussels will not change - politicians are politicians.  The cost of the EU membership will increase to make up for the lost revenue from Britain departing.   

• Brexit might encourage other countries to leave.

Overall, Brexit is nothing to worry about.  It’s like an amicable break-up, even though one is sad to lose the other, the two will always be friends.