BREXIT - Run for the Hills?
JUNE 23, 2016
Future Proof, MD
Unless you live under a rock, you have probably heard that the United Kingdom voted to leave the European Union Thursday by a margin of 51.9% to 48.1%. After the vote, Prime Minister David Cameron—who was a champion of the “Remain” campaign—announced his resignation.
The media is abuzz with predictions of economic Armageddon and the global markets are looking like they are ready to corroborate—with the Nikkei down a whopping 7.92% on the news. Let me offer my opinion of how the EU losing its second largest economy will impact you as a practicing physician in the United States.
For Your Practice
As the Pound dives to its lowest value since 1985, you should be happy to learn that those imported medications from the UK are bound to get cheaper once the regulatory jitters are smoothed out. In 2014, the US imported $3.2 billion worth of medicines from the UK, back when £1 was worth $1.69. A pound was worth $1.37 this morning.
For Your Leisure
If the UK wasn't on the list of your vacation destinations, it should be now! Your hard-earned American dollars now go much further for anything in the UK.
For Your Income
Unless you get paid in British pounds, your income should not be affected. Your investment income, on the other hand, is a different story.
For Your Investments/Retirement
If there is anything that the markets hate, it’s uncertainty. And the Brexit just introduced a boatload of uncertainty into the world economy. Given the connected nature of the global economy, it is almost a certainty the Brexit will negatively impact your portfolio. The real question is for how long?
1. Is this going to introduce short-term jitters into the market that will be quickly smoothed out by the UK and the EU coming to terms with their new relationship?
2. Is this going to spiral out of control and result in another worldwide economic crisis like the one we all lived through less than a decade ago?
Personally, I feel No. 1 is the more likely outcome, but my crystal ball is no clearer than yours.
Despite the predictions of doom and gloom, the net effect for US based physicians will likely be positive if the UK and the EU can quickly come to terms with their new relationship—which I believe is what will happen. The alternative is simply too depressing to think about. Personally, I am already planning my next British vacation.