Britain Leaves the European Union; Pound Plunges to 30-Year Low

Despite last minute pleas from the business sector and David Cameron, the British people have voted to leave the European Union. Of those who participated in the referendum held June 23, 51.9% voted for “Leave” while 48.1% wanted the country to “Remain” in the bloc.

A few hours before the final results came out, the British pound took a severe beating, falling to 1.33 dollars, its lowest in 30 years. Then a few hours after the final tally, Cameron, announced in an emotional speech, that he would resign as Prime Minister.

The “Leave” vote also rattled Asian markets. According to the BBC, Japan’s benchmark Nikkei 225 was down 7.7% to 14,982.48 points after initial gains.

In China, the mainland Shanghai Composite was down 1.2% to 2,857.58 while Hong Kong's Hang Seng is down sharply 4.7% to 19,894.12 points, according to the BBC.

In South Korea, the Kospi index was 3.9% lower at 1,909.18. The Korean won has dropped the most against the US dollar since October 2011.

Australia's ASX/200 fell sharply by 3.4% to 5,100.00 points. Over in India, Mumbai's Sensex  also fell by 3.4% to 26,022.60 points.

Prior to the referendum, analysts warned that a vote to leave the EU would trigger recession and set real GDP back by 6% by 2020.

"Whilst some of the 'Remain' campaign claims may seem alarmist, the fact is that a vote to leave would have a negative political and economic impact," said Danielle Haralambous, the UK analyst for The Economist Intelligence Unit who helped compile the report,  "Out and down: Mapping the impact of Brexit,” which explores a post-Brexit landscape.

The chief executive officer of Aon plc, a provider of insurance and risk management services, said in a statement released a few days before the referendum that "leaving is an unnecessary gamble.”

“If Britain votes to leave the European Union, foreign investment, trade, and supply chains may be constrained. And in the event of a Brexit, the center of excellence driven by innovation that has set London apart in the insurance space will be deeply challenged,” said Greg Case, President and Chief Executive Officer.

 

 

 

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