Brexit: what it is and why you should care

July 5, 2016 by Annalise Green

about the author:

Annalise Green

Technology adoption manager

On Thursday, June 23, a referendum was held to decide whether the United Kingdom (UK) should leave or remain in the European Union (EU). The vote to leave the EU won by 52 percent. This referendum has been dubbed “Brexit” as a combination of the words “Britain” and “exit”. The EU is a partnership between 28 European countries that was established after World War II. The purpose of the partnership was to create a collaborative economic market and foster intertwined political relations that would help prevent future wars between European countries. So far, no countries have left the EU since its founding.

Why does the UK want to leave the EU?

Although the EU was first formed after World War II, the UK did not join the union until much later, in 1973. The UK has historically expressed resistance to fully participating in the EU. For example, the UK chose not to accept the EU’s currency, the Euro. Recently though, the UK has voiced increasing complaints about high membership fees and dissent with EU rules and regulations, particularly concerning issues of border control and movement of individuals into the UK. One of the key factors influencing those who wanted to leave the EU was the Syrian refugee crisis that has caused thousands to flee to western European countries. As a result, many in the UK are seeking greater control of the nation’s borders.

The aftermath and why Americans should care

Over 30 million eligible voters in the UK voted in the referendum. England and Wales primarily voted in favor to leave the EU, while Scotland and Ireland voted to remain. The UK now has two years to negotiate a withdrawal from the EU, and it is unclear what this process will look like. Until then, the UK will need to continue abiding by EU rules and regulations. David Cameron has since stepped down as Prime Minster of the UK with elections to be held in October. Scotland is likely to hold an independence referendum. It is possible that additional countries will try to exit the EU. Only time will tell what long term impact this decision will have on the future of the EU and European politics.

In the immediate aftermath, the stock market has plummeted, and both the British Pound and the Euro have fallen in value. Trade deals will need to be re-negotiated between the UK and the EU, which will directly impact US consumers and businesses. Business growth could stall in the face of uncertainty. Although opinions differ as to how severely Brexit will impact the global economy, there is no doubt that the effects will be felt far and wide.

As a history major who has studied European history extensively, I am extremely interested to see what the future holds for the fate of the EU and what this means for the rest of the world. The EU has played a tremendous role in maintaining peace and economic stability. If Brexit triggers a domino effect of countries leaving the EU, this will majorly impact not only Europe but the rest of the world.

Advicent Solutions provides financial technology solutions for you to create strong financial plans that your clients can be confident in when the industry is shaken by global events. To learn more about our products, click here or call (855) 885-7526 to speak with an Advicent representative. 

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