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Honest Information, Profitable Trading

Durudarshan - Investment Analysis

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Some lessons from the shock of Brexit

Posted on June 24, 2016 at 4:11 PM Comments comments ()
Most people in the United Kingdom were surprised, perhaps even shocked, to wake up on this bright beautiful morning to discover that the verdict of the E.U. Referendum was a resounding Leave.  That had been seen as a perhaps spirited, wishful endeavour by some dramatic and entertaining people, including the UKIP's Nigel Farage, and the former London Mayor Boris Johnson, who has the colourful history of being descended from a Pasha of the Ottoman Empire.

But at 8.20am London time, standing outside No.10 at a speaking table with a microphone especially arranged, David Cameron indicated his resignation over this issue.  This foremost proponent of the Remain campaign probably felt compelled to follow his principles and announce his intention to resign, possibly in October when they have the Conservative Party Conference.

As for a timetable to find a Prime Minister to replace him, he merely indicated that there was no great urgency to trigger the Article 50 of the Lisbon Treaty regarding the exit from the European Union, and that could be done in the next two years.  However, Mr Cameron will be glad to let his Party choose his successor, someone who is likely to carry favour with the Brexit campaign and could credibly negotiate Britain breaking her ties with the European Union.

There are some ardent pro-Exit campaigners in the Conservative Party, and it is probable one of them will become Mr Cameron's successor as Prime Minister, and thereafter engage in the process of extricating from the European Union. 

The European Union ministers were not at all happy to hear the news either.  No one could have imagined any member nation wishing to Leave.  It has left them considering a situation that once seemed imponderable. 

But the British public, turning out in huge numbers at the polling stations, on a day marred by rain and localised flooding, for which alternative arrangements were made to accommodate the voting, helped to deliver their verdict : 52 percent in favour of Leave, and 48 for Remain.  There was a 72 percent turnout, so no one was complacent or taking victory for granted.  It was simply the will of the people, delivered in numbers, that they were happy to break off with the European Union.

Now that it has happened, the Brexit will serve as a precedent to other countries.  It has given courage to the right wing or nationalist parties in other nations, and it is conceivable they too could be launching such campaigns. 

To several observers, it seems there was some direct co-relation between what could be considered deprived or neglected areas and the huge turnout for the Leave side.  The people were simply exhausted seeing their money go to Brussels, receive only part of it back, and having to suffer lack of hospitals, medication, school places, repairs to local infrastructure, lack of investment in jobs creation (with factories and houses boarded up) and such amenities.  All these citizens will not countenance the idea of added immigration, even the mere mention of it, which the European Union or some of the member states seem to suggest.  When people don't have resources for themselves, they are most unlikely to welcome other people to come and join in. 

Surmising from comments made to the press by MrDonald Trump (the presumptive Republican Nominee for President), visiting his golf course in Scotland, one of the issues motivating the Leave campaign was immigration.  And he sees the U.S. having similar grounds for conflict, and possibly his own election as President in November. 

To look at Brexit in a positive way on this beautiful, glorious sunny afternoon, I imagine the British government could certainly help the deprived or neglected areas in Wales and Northern England with the money they won't now have to send to the E.U. 

As for the E.U., their member states will always have the friendship and good trading relationships they have with the U.K.  In my opinion, the current Stimulus being issued by the E.C.B. will help a continuing economic Recovery among the Euro Area nations, and the strong phase of growth in the U.K. will enable exchanges both ways. 

Scotland enjoyed a tremendous Remain vote yesterday, and their First Minister, Mrs Nicola Sturgeon, has reaffirmed her nation's preference to remain part of the E.U., and perhaps might be calling for a second referendum to break away from the U.K. if needs be.  Perhaps they will now have to devise some formula for each part of the United Kingdom keeping their preferred alliance while at the same time keeping together.

Regardless of everything else, the United Kingdom will always maintain its part in the NATO alliance, of that there is at least hardly any doubt.  It is not without reason that Russian submarines were found in British waters, or trying to intrude in the airspace.  It is certainly a concern amongst the various nations that they would not like to be gobbled up by this superpower, who has ample land but likes to be mischievous. They can always playfully act they are keeping everyone on their toes.

Hopefully, there will be no love lost over this result of the Brexit issue; perhaps in most matters, all the various nations can continue to maintain and further their meaningful friendship and trade relations with the U.K., as before?  That would call for friendliness and generosity of spirit, which all certainly have.  In which case, this Brexit result will have been no bad thing.  In the cold light of day, it has thrown up lots of issues for consideration, and lots of possibilities where corrections can be made. 

I trust positive changes will come out of this.

Wishing you a joyful weekend.

Kind regards,

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