Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

Want to save this page for later?


The Daily

UK Votes for Exit, World Markets Shudder

Chris Gaetano
Published Date:
Jun 24, 2016
By David Liuzzo, CC BY-SA 4.0The Dow Jones Industrial Average fell nearly 500 points in reaction to news that the UK has voted to leave the European Union, according to Bloomberg. As of about 9:30 a.m. the Dow is currently at 17,543, representing a drop of 467 points. The S&P 500 is also looking bleak, with a 2.6 percent drop this morning, the highest in four months. Nasdaq has also had its worst losses in four months, having dipped three percent. Bloomberg noted that this is in sharp contrast with the recent market rallies when it looked like there was more support for the UK remaining in the EU. The British pound, meanwhile, has overnight become weaker than it's ever been since 1985. 

Overall, world stocks lost $2 trillion in value, according to Reuters

The vote came as a shock to investors, who had been assuming that prior poll data showing support for remaining in the EU would stay true, according to USA Today. An analyst cited by USA Today, however, indicated that investors are over reacting due to the dire warnings given by EU supporters. As time goes on, the analyst said, investors will realize that Britain still has a wealthy market that companies want to invest in. 

Britain's financial center is reeling from the vote, which calls into question whether London can remain the financial epicenter for Europe, said another Reuters story. Investment banks indicated that they could move thousands of jobs out of the UK in the event of a "leave" vote, though whether this happens depends largely on how the country handles its exit. Everything will depend on the degree to which the UK can retain access to the EU's free single market. Regardless, the transition will take some work: Reuters cites the HSBC Chair Douglas Flint saying that it will need to establish fresh terms of trade with European and global partners, which will be a complex and time consuming process. 

An article in Forbes written prior to the election said that Britain leaving the EU will lead to a more complex tax structure, as it will need to reconfigure a new value added tax system with new customs duties and tariffs that now exist for all goods being imported or exported to other parts of the Eurozone. Another Bloomberg article pointed out, too, that the UK may also lose out on a tax provision that allows subsidiaries to be exempt from withholding taxes on dividends paid out to British parent companies. 

The vote also has impacts for US companies. Marketwatch indicates that 9 percent of all US foreign affiliate profit comes from the UK. It also makes the UK less strategic for US investors, as it would no longer be the gateway to the EU that many companies have used it for. 

The EU, for its part, has said that the UK must leave without delay, according to the BBC, as the longer the process goes on, the more uncertain things become. EU leadership wants the UK to begin the process of withdrawing as early as next week, said the BBC.