7 Reasons Why Brexit Didn’t Destroy the World After All
Forecasts of doom, financial collapse and political upheaval have been common since the unexpected British vote to leave the European Union, which is commonly called Brexit. However, the imminent collapse of Britain’s economy that was predicted now seems unlikely according to a Spectator.co.uk report. The analysis shows that there were fewer job losses than expected and only modest losses in U.K. stocks. The FTSE 100 share index is now higher than before the vote, and the FTSE 250–which features smaller firms that are more British-based–has almost fully recovered.
Brexit Fallout Actually Seems to Favor the United Kingdom’s EU Vote
The International Monetary Fund, which predicted chaos after the Brexit vote, now takes a more relaxed view and predicts U.K. growth rates of 1.7 percent in 2016 and 1.3 in 2017. These growth rates are better than those predicted for Germany, Italy or France. Many countries have jumped on the U.K. bandwagon by sending positive signals about possible trade deals with Britain. These include societies as diverse as Australia and South Korea. Although the pound has lost 10 percent against the dollar, this development actually makes British goods more attractive in foreign markets. The EU vote, far from generating economic chaos, seems to be giving the U.K. a financial boost.
The developments haven’t seemed to hurt the economies of other countries either. Record stock market gains, despite sluggish global economies, demonstrate that investors are more concerned with finding winning investments in the sustained bull market. There are, unfortunately, reasons to believe that the stock market is headed for a crash. Burgeoning national debt in most advanced economies, artificially low energy costs, poor corporate earnings and sluggish growth rates indicate that a market correction is likely. These inherent weaknesses could generate an economic collapse, political upheaval or unsuspected consequences–such as war, trade embargoes or other results.
Archduke Ferdinand Scenarios Are Still Possible and Could Trigger a European War
It’s not over yet, and Brexit could still generate world-shattering consequences. The assassination of Archduke Franz Ferdinand, heir to the Austro-Hungarian Empire, is widely credited as the trigger that led to World War I according to History.com. The 1914 assassination triggered a chain of events that eventually involved most of the world. Prussian Otto Von Bismarck, who unified Germany in 1871, once quoted, “One day, the great European War will come out of some damned foolish thing in the Balkans.” Bismarck was astonishingly prescient, and it could happen again.
There are still significant worries about Britain’s decision to leave the EU. People tend to forget that the deal hasn’t yet been done, and Britain will still trade under EU auspices for almost two more years. Today’s instant communications and shorter news cycles have accelerated reaction times, and people now tend to regard Brexit as old news. It’s not; the consequences have only just begun. Although Brexit alone is unlikely to cause Armageddon, there are scenarios where Brexit could trigger nuclear exchanges in the European theater. Medium.com outlines the following end-of-the-world scenario:
- British success in leaving the EU could encourage other members to leave.
- A divided Europe might include a pro-Russian faction comprised of France, Hungary, Slovakia, Poland and other countries with anti-EU sentiments.
- Russian leader Putin could meddle in Europe’s affair by funding and encouraging this result.
- The United States, under a Trump presidency, might offer little or no resistance and impose no economic sanctions against Russia and its leader, Putin, whom Trump admires.
- The Baltic states could declare war against Russia, which could lead to using nuclear weapons in Europe.
This is one possibility for an overdue European war that could be traced back to the Brexit decision. It’s impossible to predict precisely what could constitute an Archduke Ferdinand moment, but Europe’s economic weaknesses open the gates to charismatic but narcissistic leaders–such as Putin and Trump–who fan the flames of hatred, nationalistic pride and self-sufficiency above humanitarianism. History is quickly forgotten by people who never lived through the excesses of dictatorships, but there are plenty of potential despots waiting to capitalize on circumstances to push their agendas.
Keeping Abreast of Brexit Developments
It doesn’t seem likely that the world will end immediately because Britain voted to go its own way and sever its ties to European political and financial policies, but events could trigger catastrophic consequences that move further out-of-control if they’re not carefully monitored. The lessons of history–less than a hundred years in the past–show that economic influences and poor political decisions can foster cascading events that ultimately lead to war. Europe has never gone this long without broad-based wars, so history suggests that war isn’t that much of an imaginative stretch.
On the other hand, too much gloom and doom can stifle the investment markets and prevent people from earning reasonable returns. A cautious approach is indicated regardless of personal politics or investment strategy. It’s still early days in the Brexit saga, so best practices favor keeping informed about financial and political developments. If Britain actually profits from its decision, other EU members might copy the strategy and leave the EU, which would result in a fractured European Union. Find out more about Brexit and worldwide financial developments at the PersonalMoneyStore.com.