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| Brexit fallout: seven ways the EU referendum could damage US interests | |
| (35 minutes later) | |
| Barack Obama has been a key voice warning how leaving the European Union could impact Britain. But with opinion polling split ahead of Thursday’s referendum, there are growing questions in the US about what this seismic geopolitical event could mean for Americans too. | Barack Obama has been a key voice warning how leaving the European Union could impact Britain. But with opinion polling split ahead of Thursday’s referendum, there are growing questions in the US about what this seismic geopolitical event could mean for Americans too. |
| Related: Consequences of Brexit sink in for US politicians after killing of MP | Related: Consequences of Brexit sink in for US politicians after killing of MP |
| 1) The economy | 1) The economy |
| The International Monetary Fund estimated in a report published this weekend in Washington thata “Brexit” could knock up to half a percentage point off the combined output of all advanced economies by 2019, including the US. The IMF expects international trade and investment globally would shrink in response to the political uncertainty of an exit, especially one that would throw Britain, a key US trading partner, into sharp recession. | The International Monetary Fund estimated in a report published this weekend in Washington thata “Brexit” could knock up to half a percentage point off the combined output of all advanced economies by 2019, including the US. The IMF expects international trade and investment globally would shrink in response to the political uncertainty of an exit, especially one that would throw Britain, a key US trading partner, into sharp recession. |
| 2) Financial markets | 2) Financial markets |
| Turmoil in the bond market has already had a more direct impact on US monetary policy, after Janet Yellen warned that uncertainty over Brexit was a factor in the Federal Reserve’s decision not to raise interest rates this week. Traders on Wall Street expect volatility not seen since the financial crisis of 2007-08 if Britain actually votes in favour of leaving on Thursday, with many US banks based in the City of London on the front line. | Turmoil in the bond market has already had a more direct impact on US monetary policy, after Janet Yellen warned that uncertainty over Brexit was a factor in the Federal Reserve’s decision not to raise interest rates this week. Traders on Wall Street expect volatility not seen since the financial crisis of 2007-08 if Britain actually votes in favour of leaving on Thursday, with many US banks based in the City of London on the front line. |
| 3) Transatlantic alliance | 3) Transatlantic alliance |
| The biggest concern in Washington is not just over the waning influence of its most important diplomatic ally within Europe, but the destabilising effect an exit could have on the continent as a whole. If other member states follow suit, the EU itself could slowly unravel, leaving it vulnerable to growing Russian economic influence and perhaps weakening Nato too. The western alliance, constructed after the second world war and a cornerstone of US influence in the world, could have a deep crack running through it by Thursday. | The biggest concern in Washington is not just over the waning influence of its most important diplomatic ally within Europe, but the destabilising effect an exit could have on the continent as a whole. If other member states follow suit, the EU itself could slowly unravel, leaving it vulnerable to growing Russian economic influence and perhaps weakening Nato too. The western alliance, constructed after the second world war and a cornerstone of US influence in the world, could have a deep crack running through it by Thursday. |
| 4) Corporate investment | 4) Corporate investment |
| American multinationals like Ford and Goldman Sachs have been at the forefront of corporate calls for British voters to consider what leaving the world’s largest trading bloc might mean for inward investment. The Detroit car giant exports engines from major plants in Bridgend and Dagenham, but it is the intangible benefit of an overseas headquarters and banks that could be most consequential. Corporate America finds it easy to invest in the UK for many reasons, but language and culture may not be enough if British voters jeopardise London’s role as the commercial capital of Europe. | American multinationals like Ford and Goldman Sachs have been at the forefront of corporate calls for British voters to consider what leaving the world’s largest trading bloc might mean for inward investment. The Detroit car giant exports engines from major plants in Bridgend and Dagenham, but it is the intangible benefit of an overseas headquarters and banks that could be most consequential. Corporate America finds it easy to invest in the UK for many reasons, but language and culture may not be enough if British voters jeopardise London’s role as the commercial capital of Europe. |
| 5) Anglospheric ideals | 5) Anglospheric ideals |
| Supporters of Brexit often point to the historic ties between English-speaking nations as a reason not to fear being ostracised by Europe. But from an American perspective, it is far from clear what the benefits of this are. British influence at the European Commission has helped spread Anglo-Saxon legal traditions and free market principles well beyond the Anglosphere. English could well continue to be a working language in Brussels, but the ideals and culture that suit US global interests may no longer be quite so welcome. | Supporters of Brexit often point to the historic ties between English-speaking nations as a reason not to fear being ostracised by Europe. But from an American perspective, it is far from clear what the benefits of this are. British influence at the European Commission has helped spread Anglo-Saxon legal traditions and free market principles well beyond the Anglosphere. English could well continue to be a working language in Brussels, but the ideals and culture that suit US global interests may no longer be quite so welcome. |
| Related: 'Why not Texit?': Texas nationalists look to the Brexit vote for inspiration | Related: 'Why not Texit?': Texas nationalists look to the Brexit vote for inspiration |
| 6) Currency fluctuations | 6) Currency fluctuations |
| The most noticeable short-term consequence of a Brexit would likely be a collapse in the value of the pound, and possibly the euro too, against more stable international currencies. How long that lasts depends on the significance the wider trade and economic dislocations, but there is little doubt that a strong dollar is the last thing US exporters want right now. Already divergent interest rate cycles could grow worse, and fuel demands for protectionism and currency wars around the world would more than offset any short-term bonus for American tourists heading to Wimbledon. | The most noticeable short-term consequence of a Brexit would likely be a collapse in the value of the pound, and possibly the euro too, against more stable international currencies. How long that lasts depends on the significance the wider trade and economic dislocations, but there is little doubt that a strong dollar is the last thing US exporters want right now. Already divergent interest rate cycles could grow worse, and fuel demands for protectionism and currency wars around the world would more than offset any short-term bonus for American tourists heading to Wimbledon. |
| 7) Political upheaval | 7) Political upheaval |
| Trade protectionism is only one area where US domestic politics may be affected negatively by Brexit. The anti-immigration mood driving Donald Trump would receive a major vindication if Britain voted to leave the EU, possibly filling populist nationalists around the world with a sense that they are in the ascendant. UK prime minister David Cameron would also be forced to resign just as Barack Obama enters his lame-duck phase, leaving western democracies poorly equipped to respond. | Trade protectionism is only one area where US domestic politics may be affected negatively by Brexit. The anti-immigration mood driving Donald Trump would receive a major vindication if Britain voted to leave the EU, possibly filling populist nationalists around the world with a sense that they are in the ascendant. UK prime minister David Cameron would also be forced to resign just as Barack Obama enters his lame-duck phase, leaving western democracies poorly equipped to respond. |