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Greater Niagara Chamber of Commerce

Taking stock of the Brexit vote

Take a deep breath, pull it together.

Europe — indeed the world — has changed with a UK vote to leave the European Union.

But there are many variables at play as things unfolds, said Brock political science associate professor Blayne Haggart.

“Hopefully everyone will take the weekend and blow into a paper bag and consider things,” said Haggart. “Certainly, things that we thought would not be in play are now in play. Even the future of the E.U. itself and the United Kingdom.

“Who would have thought … Canada would be a model of stability in pretty much every single way, compared to something like the E.U.,” he said.

Haggart also spoke to the enduring power of nationalism revelealed by the vote.

“It is still the driving force behind human behaviour in the world,” he said. “And appeals to economic self-interest can’t alone carry the day in these kinds of things.”

He also points to the the 1995 referendum in Canada, where voters in Quebec narrowly decided not to seperate.

Haggart suggests a tipping point here was the appeal to a “Canadianess that united everybody”, and not the economic necessity of a union.

Many in the U.K. felt no attachment at all to the E.U., prior to their vote.

This, as the fallout has begun following Thursday’s stunning win by the “leave” forces in the U.K.

The value of the pound plummeted Friday, while stock markets tanked around the world.

The very stability of the U.K. is also in question, given the sharp divides highlighted by the vite. Young voters overwhelmingly wanted to be part of the E.U., older citizens wanted out.

Scotland, London and Northern Ireland wanted in but much of the rest of Great Britain wanted to leave.

Meanwhile, Scotland’s first minister Nicola Sturgeon said it’s “democratically unacceptable” Scotland could leave the EU against its will.

Sturgeon has said the requited legislation to enable a new independence referendum will be prepared, to take place “if and when Parliament so decides.”

Scotland voted in favour of the UK staying in the EU by 62% to 38%.

The UK as a whole has voted to leave, by a margin of 52% to 48%. That prompted UK Prime Minister David Cameron to announce he’d be leaving as PM in October.

But what of the economic blowback to Canada as the dust settles?

According to Bloomberg News, the U.K. was Canada’s fifth-largest trading partner last year, accounting for about $21.2 billion in total trade.

This compared with more than $540 billion in cross-border commerce with the U.S., Canada’s largest partner by far, said the Bloomberg item as reported in the National Post.

Paul Shelestowsky, the Niagara-based senior wealth advisor for Meridian also notes that the U.K. is a bit player in Canadian trade — about 2.5 per cent. In the U.S., that trade accounts for roughly three per cent.

“In North America in general, the consensus is the impact will be minimal,” Shelestowsky said.

Meanwhile, Shelestowsky said he’s also heard from fund managers about cash holdings in sensitive portfoilos being ramped up in anticipation of a leave vote.

“Believe it or not, this is actually going to turn out to be a very good buying opportunity for these fund managers,” he added. “They are buying cheap stocks. When there is a downturn this is how good fund managers separate themselves from average fund managers, they’ve prepared for it.

“There is no doubt the U.K. is going to be in for a very rough ride,” Shelestowsky said. “The majority of economists believe the U.K. is going to be underperforming, possibly going into a recession.

“We’re not immune,” said Shelestowsky. “But a lot of what we’re seeing in North America I believe is short-term knee-jerk reaction, whereas in Europe, it’s going to be more drawn out pain.”

Mishka Balsom, president/CEO of the Greater Niagara Chamber of Commerce, believes the economic impact is unclear.

“But in the short-term, the referendum result is having an impact on currencies, commodities and stocks,” Balsom said. “Uncertainty never bodes well for financial markets — businesses prefer price stability

“Brexit could stall the implementation of Canada’s trade pact with the EU or Canada’s trading with the U.K.,” she added.

“In addition, both Britain’s and Europe’s economies are expected to slow down, which could create a lower demand for Canada’s oil and commodities.”

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