Britain’s decision to leave the European Union — known colloquially as the “Brexit” — will make a significant impact on the automotive industry. Last Thursday’s decision will soon make the once allied entities trade partners instead.
According to IB Times, currently 11% of BMW’s fleet is sold to Britain while Britain exports 58% of its domestic vehicles to other EU nations. Considering that automotive coatings had a value of $2 billion in 2014, this greatly affects both the British economy and the automotive industry.
While it will take some before Britain is actually removed from the EU, many believe this is just the beginning of Britain’s demise. This is because its citizens still chose to leave even with the benefits of EU membership. Furthermore, many are curious to see how the EU recovers from Britain’s secession as well.
Now that Britain has announced its exit from the union, many fear that other countries, such as France and Greece, may soon follow suit. If this indeed becomes a reality, the future of the European Union is more at stake than we know.
The British pound sterling dropped 10% after the decision was made public, the lowest it has been in 31 years. The euro took a hit as well, falling by 3.8%.
“After Brexit, all of us who believe in the values and principles that the EU was designed to uphold must band together to save it by thoroughly reconstructing it,” said billionaire investor George Soros.
Britain is not the only one feeling the effects of Brexit. USA Today cites that the United States stock market suffered its worst drop in 10 months the day after Brexit was announced. The Dow Jones industrial average fell 3.4% while the Nasdaq fell 4.1%. Altogether, the drop erased roughly $800 billion in U.S. market value.
“In the short term, markets will trade on emotion, so make sure you don’t end up becoming your portfolio’s worst enemy,” said Bob Stovall, U.S. equity strategist at SandP Global Market Intelligence.