Well, like everyone else I just can’t believe that the referendum ended up with a “Leave” result.
I was going to post an item saying that now we have the vote behind us we can get on with our lives again, but this has changed everything.
The immediate reaction round the world is not very encouraging to say the least. The pound dropped in value against the US dollar by 11% and against the euro by 9%.
That does not sound a huge amount, but on the foreign exchange markets drops of this size are considered mega. If the pound does not recover a lot of things are going to cost a lot more.
Overseas holidays for one. That doesn’t matter if you don’t go away for your holidays, but a family of four is going to have a lot less spending money when they get there.
More important, a whole bundle of things we have to buy back home are going to get more expensive. Not just petrol and diesel for the car, but energy prices overall including home heating. We will see the cost of food increasing, whether it’s imported or not, because many of the costs incurred by food producers will be priced in dollars.
The financial reaction elsewhere has not been good. The value of bank shares has crashed. The government still holds a lot of shares in UK banks after the credit crunch bail-out, and was planning on selling another slice later on this summer.
The value of the government shares in Lloyds Bank and RBS alone, (our shares!), dropped by over £8 billion. This is our money. Well over the total cost of one year’s membership of the European Union.
Also a lot of our pension money is invested in the bank sector. Add in Barclays Bank, which lost 30% of it’s value overnight, and the fund managers are sitting on huge losses on their funds. We are talking tens of billions of pounds in the banks alone.
There hasn’t been very much reaction round the world yet. I just think everyone is too stunned and trying to work out what it means. This has had a knock-on effect everywhere. Britain is the 6th largest economy (we were 5th before the vote, now France has overtaken us because the pound is now worth less). Overseas markets will recover, but only time will tell us what is waiting for the UK.
Meanwhile, the signs are not good. Employers are sitting on the fence, but investment plans have been shelved, so we can expect unemployment to increase. The silence from large foreign investors such as Nissan, BMW and Honda is worrying.
Non-EU countries are apparently phoning up the UK to ask about trade deals. Not surprising, really. They want to sell us their stuff.
This is what the “experts” had predicted. I am not sure what we are going to get out of this decision, apart from a lot of grief.
Fingers crossed. Better concentrate on the allotment.