Watching from 3,900 miles away, observers in Ohio wondered Friday how they would feel the impact of Britain’s historic vote to wrench itself free of the European Union.
The first five minutes of U.S. stock trading on Friday gave some a quick glance as the Dow Jones dropped 500 points.
But most don’t expect the impact to last here. It will take at least two years for Britain’s exit from the EU to actually happen. And long-term, the impact in Ohio may be muted, Terence Lau, a, University of Dayton marketing and management professor said.
Trade agreements will have to be renegotiated, stock prices will be pressured for a time, affecting investors and anyone who has a 401k retirement account. And the economy in general will be unsettled.
“There are obviously a lot of dimensions to this,” Lau said. “It will take some time for all of this to work itself out. But I think the impact on Ohio will ultimately be pretty limited.”
British voters chose Thursday to become the first nation to leave the 28-member EU after a divisive campaign, toppling the government, sending global markets plunging and shattering the stability union formed half a century ago to prevent future wars.
British voters signaled how important the issue of immigration is to them, an issue that resounds on American shores, too, said Donna Schlagheck, a professor emeritus in political science and international affairs at Wright State University.
The presumptive Republican nominee for president, Donald Trump, has pledged to better control American borders, particularly the border with Mexico, while the presumptive Democratic nominee, Hillary Clinton, has pledged to pursue comprehensive immigration reform “with a path to full and equal citizenship” for undocumented immigrants.
“I genuinely think it was the (terrorist) attacks that we’ve seen in Europe, starting with Charlie Hebdo, etc.,” Schlagheck said, referring to the French magazine that suffered terrorist attacks in 2011 and 2015. “Britain has a substantial Asian and Middle Eastern immigrant community, as well.”
Harry “Harvey” Caswell, owner of Wise Choice British Foods in Huber Heights and a native of Wales, said the EU project didn’t work for Britain. It’s a “strong country, a strong people” that has historically prospered on its own, he said.
“Passing all those governmental issues to strangers hasn’t really worked well, I don’t think,” Caswell said.
“The Brits are an independent people in lots of way.”
Glen Duerr, a citizen of the United Kingdom and assistant professor of international studies at Cedarville University, voted to “remain” in the U.K. referendum.
“The E.U. is cumbersome and bureaucratic, but at the end of the day, the reason for its being is to prevent war and create interdependence through trade, which are both good reasons for not leaving,” Duerr said.
What happens next remains to be seen. The British pound fell Friday, meaning imports into Britain will become more expensive, which could spark inflation elsewhere.
“The U.K. could go back into recession, but the question is how severe will it be,”Duerr said. “And when dominoes start to fall, what else will happen?”
Liam Anderson, a Wright State University political science professor who grew up in the U.K., was not surprised by the vote. But he said he was disappointed.
“The problem is that the defects of the E.U. are very obvious and easy to criticize — essentially unlimited internal migration, the waste, the salaries of Euro MPs (members of parliament), and so on — whereas the benefits are more diffuse and much less tangible,” Anderson said in an email.
“Basically, almost no one in Europe understands how the E.U. actually works and what it does, so it is difficult to defend,” he added.
Now, he expects that Scotland will vote again on independence, and this time it will win, separating itself from the U.K., a collection of countries that includes England, Scotland, Wales and Northern Ireland.
Dow Jones drops
Meanwhile at home, the Dow Jones Industrial Average dropped some 500 points in the first five minutes after markets opened Friday, and ended the trading day at 17399.86, a loss of 611.21 points or 3.39 percent.
On the other hand, oil prices also fell, which will help drivers in the summer driving season, and the Federal Reserve will likely delay an increase in interest rates, at least for a while.
Josh Taylor, a financial advisor with the Kettering Edward Jones office, offered simple advice: Don’t panic.
Market “corrections” happen about once a year and bear markets happen perhaps every three to four years, Taylor said. Hang in there, and the rebound will come, he said.
“These are normal events,” Taylor said. “We feel like time has shown us that owning quality stocks and bonds, and having the appropriate mix of those, you can weather markets like this.
The parent company of LexisNexis, which has a large presence in the Dayton area with more than 2,000 employees, is based in the United Kingdom. Relx Group (formerly Reed Elsevier) has said it will decline to comment on the likely effect.
“EU membership is a matter for the British people. As a company we have no plans to get involved in the public debate or react to it,” the company said in statement.
The impact in Ohio will be limited and short-term, said Terence Lau, a marketing and management professor at the University of Dayton.
Ohio’s biggest exporting destinations are Canada and Mexico — with about $20 billion of Ohio goods going to Canada annually and about about $6 billion of goods to Mexico. Lau said. Even then, China and France are bigger trading partners with Ohio than the United Kingdom.
“Our trade with the U.K. has always been with the U.K.,” Lau added. “It’s not necessarily with the European market. We look at each country separately anyway.”
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