NORFOLK, Va. (WAVY) — The so-called “Brexit” vote is a big decision with implications that will likely be felt for some time overseas and here at home.
Voters in the United Kingdom decided to make the nation the first to leave the European Union.
EU leaders expressed disappointment over the decision and the referendum result. Investors around the world went into panic mode, sending markets plunging on Wall Street and elsewhere.
In fact, the exit from the European Union may not be so good for business. The historic decision has plunged world markets into uncertainty.
Larry Filer, Associate Professor of Economics and Associate of Economics Forecasting Project at Old Dominion University, says there could be an impact, but not a huge one on our wallets.
“Many people don’t recognize that Great Britain did not have the Euro to begin with, so the Brexit is the exit for Great Britain from the European Union, not from the Euro currency, because it never had that in the first place,” said Filer. “The stock market is very volatile today. People are still having a hard time processing what this really means.”
On the mortgage side, if you are looking to buy a home, the Brexit vote may not be a bad thing. Right now, mortgage rates are the lowest they have been in several years and they could stay that way.
“Most of the experts were leaning towards the fact that if Great Britain exited the European Union, that would probably force the Federal Reserve to pause a federal interest rate in July, which could keep things like mortgage rates and car loan rates lower for a longer period of time,” said Filer.
As far as those with 401K plans, Filer says he is under the belief that the impact won’t be large.
However, other experts say accounts could be impacted. Those investments could face some stock market turmoil. Experts across the board seem to agree on one thing — since the accounts are long-term investments, investors should not panic and rush to make changes to their portfolio.
“Overall, over a period of time, this is just one blip on the larger scheme,” said Filer.
Additionally, for people looking to head out for summer travel to Europe, the U.K.’s divorce from the EU could work in your favor.
According to the Associated Press, the euro fell against the dollar and the pound dropped to its lowest level since 1985, plunging more than 10 percent from about $1.50 to $1.35 before a slight recovery, on concerns that severing ties with the single market will hurt the U.K. economy and undermine London’s position as a global financial center. Bank of England Gov. Mark Carney sought to reassure markets and promised to take “all the necessary steps to prepare for today’s events.”
Filer said this could be a good time to take your dollar overseas.
“Our impacts are largely going to be small, the impacts on the Great Britain economy are going to be massive, potentially,” said Filer. “So, if you are interested in traveling to Europe, it’s already cheaper than it’s been in previous years but it’s probably going to be a good time to take your dollar overseas.”
Senator Mark Warner (D-VA) released a statement in response to the Brexit, which reads in full:
The United States respects the decision of the British people. The special friendship between our two nations has endured the test of time, and will remain as strong as ever. While volatility in the global markets will likely continue for some time, the American economy is resilient and well positioned to recover from any short-term impacts. The Federal Reserve has been preparing for this outcome by providing additional liquidity and keeping interest rates low. While there is more Congress can and should do to invest in the economy and help working Americans who are hurting from the economic disruption of the last decade, we shouldn’t lose sight of this fact: There is nothing in the world that can take away the innovative and entrepreneurial spirit that has always been the life-force of the American economy. With smart, targeted policies to respond to current instability, the U.S. can withstand this temporary turbulence as we continue to out-compete and out-innovate every other nation on earth.”