Brexit Blues

 

IMG-20160213-00389What will be the negative impact on the real estate sector in St Kitts as UK households rebalance their budgets? (Photo: Peter Adrien)

The blues became a central component of English popular music in the 1960s. Blues records by African American artists were released in the United States in substantial numbers between 1920 and the late 1930s, but were sold primarily to black consumers in large urban centres and the rural south, as its spoke to their plight, hopes and aspirations. Today, in Britain, we speak of the ‘Brexit Blues.’  The ‘blues’ is a state where people are experiencing debilitating and disabling symptoms of feeling down, depressed or hopeless and having little interest or pleasure in doing meaningful things – a feeling brought about by the negative impact of Brexit. Sadness, insomnia, frustration and confusion: the ‘Brexit blues’ have gripped many European Union supporters since Britain’s shock decision to leave the bloc last week.

You would recall, on Thursday, June 23, the British people voted by a margin of 3.8 percent to leave the European Union. With a turnout of 72 percent, 51.9 percent of the electorate made the historic decision, changing 43 years of European history since the United Kingdom joined the European Community in 1973. The vote toppled prime minister, David Cameron, global financial market plunged, as expected, but the uncertainty which will be spurred by the prolonged delinking of domestic economy from the EU economy will have negative impacts on all facets of international business; the euro fell against the dollar and the pound dropped to its lowest level since 1985 and; the “Out” Vote has shattered the stability of the European Union and, left behind, in Britain, a very divisive civil society polarized along age, ethnicity and nationality

What triggered the move to file for a divorce after four decades of marriage? The people who were against staying with European Union, felt that their self-determination and independence were been taken away; EU immigrants are taxing Britain’s housing market, public services and employment rolls. Of, course, those concerns were aggravated by the refugee crisis of the past year that saw more than 1 million people from the Middle East and Africa into the EU. The “Leave voters” want their sovereignty; their final decisions on all matters pertaining to them; they want their money to be used only for legal citizens.

The conventional wisdom is that the divorce will hurt the British economy and undermine London’s position as a global trading space and a financial center. The economic fundamentals however will be severely affected for the following reasons. First, changing trade relationship and changing trade regimes will necessitate complex processes of renegotiations of contracts, which will certainly increase the cost of doing business. Second, restriction on labour mobility will exacerbate the low productivity problem and make British services and goods, at least in the short-medium term, less competitive. Third, economic growth could be arrested in the short-medium term, obviously as production and distribution network adjust. Fourth, with all of these, there will be the impact on the price level, rise in unemployment, erosion of household disposable income, and the pauperization of fixed income earners particularly pensioners. Fifth, persistent decline in the pound or erratic movements will certainly erode business confidence; force investors to shift their portfolio to more secure and stable markets, as it is already happening with the US, further eroding the foreign reserve stock of the country.

Because the Caribbean external economy is inextricably linked to the world economy; because Caribbean economic, financial and social life are powered by developments in the metropolitan centers, the Caribbean will be caught up in the turbulence – unable to do anything about it. Caribbean policy makers need to be concern as this is happening at time when the global economy is weak; some Caribbean economies like Barbados and Trinidad and Tobago, are in recession; economic activity is low or declining; unemployment particularly unemployment in the 15-35-year age group is very high; and food prices are galloping daily.

Europe, the major trading partner for some Caribbean countries, is still recovering from the series of financial crises that started with Greece and Italy; they cannot deal with the millions of refugees from the Middle East; and for those Eastern Caribbean Countries that are looking to Europe and China for investment, there is still concerns about economic performance. OECS Governments must be concerns about Brexit! It could threaten their development strategy. What will happen to the international travel and hospitality industry; what will happen to the Citizenship by Investment Program in St Kitts and Nevis, Antigua and Barbuda, Dominica and Saint Lucia? What will happen to the many real estate projects, which are associated with the CBI programs – many of them are inactive or have virtually closed down? We expect disruptions in international business, investment flows and project financing; we expect a sharp decline in business and investor confidence; we expect severe pains in renegotiating investment contracts.

The severity of the impact on Caribbean external trade will be dependent on the impact of Brexit on our major trading partners in North America, particularly the US.

But we do know what the future holds somewhat given the prevailing crisis of governance. The leaders, fearful of the repercussions of the divorce, are taking flight. Prime Minister David Cameron is to step down by October after the UK voted to leave the European Union. Boris Johnson, protagonist of Brexit, pulled out of consideration, confessing that he does not have the qualities of leadership that is require to help Britain make the transition. Theresa May is set to become the UK’s next prime minister after Andrea Leadsom pulled out of the contest to become Conservative Party leader. The timing of the handover of power from David Cameron is currently being discussed, but could be within days. Mrs. May, 59, who backed staying in the EU, has been home secretary since 2010 and said the be “ideally placed” to implement Brexit. The opposition Labour Party, which campaigned for “Remain”, plunged into a leadership crisis after the “Leave” vote. Labour leader Jeremy Corbyn has announced a new cabinet following a wave of resignations in protest at his leadership and amid calls to resign. The party has lost 12 of its shadow cabinet since the referendum. The combative protagonist of Brexit, Mr. Nigel Farage, the leader of the United Kingdom Independent Party (UKIP) quit with increasing death threats. He has given a statement to detectives after a flurry of threats to kill him following the British vote leave the EU. Mr. Farage said that he had achieved his political ambition to get ‘my country back’ and that he ‘wanted his life back.’ He admitted that his political career had come at a significant ‘cost’ to him, his wife Kirsten and his children. Suzanne Evans, the party’s former deputy chairman, is the most likely candidate to replace Farage as leader of UKIP. She served as party leader temporarily.

The good news is that the 59-year old, Theresa May took over as Britain’s prime minister on Wednesday, 13 July 2016, with the difficult job of steering the country through the Brexit crisis. She is the second woman in the job, following in the steps of fellow Conservative Margaret Thatcher — who was nicknamed the “Iron Lady” and whose decade-long political partnership with President Ronald Reagan helped reshape the global order in the 1980s.

The conventional wisdom is that there is a crisis of men, and we are forced to turn to our matriarchs; our queens; our empresses – our true entrepreneurs who have been the backbone of the household and macro economies in the Caribbean, behind the many men who have postured and are posturing as leaders and managers – and are getting all the underserving credits for their achievements. “The greatest want of the world is the want of men – men who will not be bought or sold; men who in their inmost souls are true and honest; men who do not fear to call sin by its right name; men whose conscience is as true to duty as the needle to the pole; men who will stand for the right though the heavens fall” (Ellen White, Education, 1952:57). Would you have imagined that so-called educated men would orchestrate a costly divorce; run away and leave the mess to two women – the Queen Elizabeth and Prime Minister May. But isn’t that how we men have always responded to real responsibility in the Caribbean in particular; and aren’t most of us children of British men, to some extent?

The bad news is that the UK is unstable today and will continue to be so in the coming months and even years. One could look for more bouts of unrest leading to violence as the legitimacy crisis deepens between government and its conflicted citizenry. Leave supporters and Remain supporters could end up fighting each other. The mass demonstrations and the many calls for another referendum reflected that many di not internalize the implications of the “yes vote” and are bitterly regretting their actions, which separate them from their interest, their contacts, their relationships and their accessibility to people and markets. As leave supporters feel betrayed by their leaders, they could take to the streets. After all, they will not forget that part of the reason they wanted to leave the EU was the expectation of something better. This so-called victory for these “real,” “ordinary” and “decent” people, as Mr. Farage put it. One could look for some of these citizens to participate in pockets of protests as their expectations remain unmet. And of course, the repercussions of all this confusion will be unemployment, crime and deviance, intolerance, and likely violence response. One could look for more tensions to bubble up, especially amid reports that immigrants are being stopped on the street and told by some leave Britain.

The picture is the making of a very divisive society; a society, if not well managed (but by whom), could descend into civil unrest. Britain’s exit or simply ‘Brexit’ has bitterly divided the country. This controversial political move has just concluded with Britain walking away from the powerful European Union. After 43 years, Britain has finally decided to leave and regain complete sovereignty of their native land. The United Kingdom joined the European Union in 1973. For more than 40 years, the U.K. had a difficulty in actually integrating with the EU. They exempted themselves from using the euro currency and did not fully accept the Schengen Agreement. Many students of Bible prophecy see Brexit as a fulfilment of the prophecy of Daniel 2:43, which predicts that the various nations of Europe “shall not cleave” (the ten toes of the image or the divided nations) one to the other. On that authority, Christian literature maps the transient nature of earthy powers.

Given that the divorce will be very painful since the Britain/EU marriage was so consummated that it links relationships across countries and continents, will Britain ever be prosperous again? With rational thinking, proper planning and good sense, nothing is impossible. Remember, “I can do all things through Christ who gives me strength” Philippians 4:13, NIV.

 

Peter Adrien is an author, business coach, financial counselor, economic adviser and columnist. Visit: www.goadriens.com. Contact him via email: peter@goadriens.com; phone: (869) 668-9752 (St Kitts & Nevis) or (305) 848-7604 (USA); twitter: @goadriens; facebook: http://www.facebook.com/Goadriens

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