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The people have spoken! Brexit has happened.

All News, Faculty   -  24. June 2016

A historic choice has been made. It has to be respected and accepted.

by Prof. Dr. Laxim Remer, Professor of Finance

Today, the UK referendum on the EU, a ride full of twists and turns, has reached its destination with the votes favouring the ‘Leave’ station. Throughout this journey, which this time, started back in 2015, the ‘should we’ or ‘shouldn’t we’ teams battled for ground. Up until yesterday evening it was not clear what the outcome would be. The bookies have however made a killing in the process with the lawyers and consultants to follow suit.

The only certainty in this whole development is the uncertainty. Whilst both parties have talked over each other’s heads about what they consider certain, it has been pretty clear, no one really knows the impact/s. The short-term impacts on capital might be more or less obvious with the markets (over) reacting, it is the long terms impacts that are hard to pin down.

The ‘dramatic’ fall of Sterling in the short run may perhaps lend a helping hand to the UK exports to begin with but this would simultaneously affect the imports. According to HM Revenue and Customs data (9th June 2016) UK is a net importer from the EU- the results of the trade negotiations that will now inevitably be set in motion cannot be predicted. One thing is certain. It will not be an easy ride for either parties – the EU nor the UK.

The German economy would feel the consequences of this separation like the rest of the EU, being the largest economy in Europe. With UK businesses now free from the Brussels directives, the businesses in Germany may quite likely suffer. According to the Ifo Institute, in Munich, in the worst case, Germany could suffer a 3% setback in its long term economic growth.

Some have called it a painful divorce settlement. A worrying sentiment that is reflected across the press is the ‘domino effect’ with Nexit already being announced by the right-wingers in Netherlands.

But then again, these doomsday scenarios that have been very persuasive in some ways – are they just that – scaremongering initiated by bodies with vested interests? The ‘leave’ team certainly thinks so.

Perhaps the real truth in all this is that, the negotiations that will now transpire to ease the separation will be telling, as they will set the new yardstick for UK and EU in the coming economic times.

A certainty however, is that CBS students now have a fertile ground for researching this historic event in its complexity and far reaching magnitude!

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