(Media Release) The United Kingdom’s historic decision to become the first sovereign country to vote to leave the European Union has reverberated across the world.
Though it’s unclear what a British divorce from Europe may look like, the decision may have caused unintended consequences for many Americans. Here’s a look at six ways the Brexit may affect the US.
1. Cheaper holidays to the UK
About one in 10 visitors to the UK is American. And the exchange rate for the dollar is better for Americans in the wake of Brexit – it’s now worth $1.32, a 31-year low, after it sank below the level it had fallen to on Friday, when it recorded its biggest one-day fall against the dollar.
This means Americans going to see Big Ben, Stonehenge or Edinburgh Castle this summer can expect their dollar to go a lot further, at least for now.
Michael Stitt, president of North America for Travelzoo, told the BBC that he advises any American travellers to the UK to check on the exchange rate right before a trip and to consider taking GBP out while the exchange rate is low and the dollar is strong.
UK hotels will almost certainly offer deals and specials, he said, and vacation operators will likely put together some “pretty aggressive” packages for going on holiday to the UK.
On the inverse, British travellers may think twice before booking a trip to the US because it will be more expensive, he said.
2. Higher airfares
Though an attractive exchange rate makes a summer trip to London more affordable now, Brexit could make flying in and out of the UK more expensive in the long term.
The UK currently operates under a single aviation market that allows British airlines the freedom to fly between EU countries and the right to fly within an EU country. The EU also has a similar agreement with the US.
The outcome of last night’s vote means the UK may lose its rights to fly in and out those countries if new contracts are not negotiated, according to Andrew Meaney, the head of transport for economic consultancy Oxera.
Ultimately, airlines could struggle to meet the same amount of demands with fewer services in and out of the UK. US airlines could also consider replacing London with a city such as Dublin as an entry point into Europe.
3. Uncertainty for Americans working in London
For American bankers living in London, the Brexit signals uncertainty about the capital’s status as the world’s largest foreign exchange market.
US banks will have to decide on moving thousands of jobs to other major European cities such as Dublin, Frankfurt or Paris depending on whether the UK is able to negotiate new trade deals to retain access to the world’s largest single market, the EU.
In a memo to staff on Friday, JPMorgan Chase CEO Jamie Dimon indicated that though the company planned to maintain a large presence in Britain, it would face significant hurdles.
“In the months ahead, however, we may need to make changes to our European legal entity structure and the location of some roles,” Mr Dimon said.
If Scotland should seek another referendum vote to leave the UK in the wake of Brexit, American bankers may find themselves packing their bags for Edinburgh, the second largest financial hub in the UK.
4. Retirement funds in jeopardy
The Brexit has roiled global financial markets, with the US, UK, Europe, Hong Kong, Tokyo and Sydney markets dropping at the opening bell.
Many Americans are exposed to the stock market through their retirement plan, also known as a 401(k) plan.
In fact, about half of America’s full-time employees participate in their company’s 401(k), according to the Pew Charitable Trusts.
The UK’s exit from the EU has already hit current market prices and could potentially trigger a recession. Investments in global stock markets expose Americans to such market turmoil, and could result in one’s equity portfolio losing value.
5. Property boom
The state of the UK economy is volatile, so American property is looking like a very safe investment right now.
“Any time there is a recession in significant markets such as London, it bodes well for the US,” international real estate lawyer and consultant Edward Mermelstein told the BBC.
“Investment will be attracted to a safe haven, and there’s no safer location than the US market… the US will be the beneficiary of continued foreign investment due to the uncertainty created by this vote.”
Americans looking to buy property should expect prices to rise in the next year – making right now a better time to buy rather than waiting.
But in the meantime, as the Washington Post pointed out, current mortgage rates will continue to be at an all-time low as foreign investors seek US government debt, pulling down interest rates.
6. Game of Thrones on a shoestring
The UK film and TV industry will be badly hurt by Brexit, the chairman of the Independent Film and Television Alliance told the Verge..
“The decision to exit the European Union is a major blow to the UK film and TV industry,” Michael Ryan told the website. “Producing films and television programs is a very expensive and very risky business and certainty about the rules affecting the business is a must.”
HBO series Game of Thrones is largely filmed in Northern Ireland, partly funded by the European Regional Development fund. It has also been filmed in Spain, Croatia, Iceland and Malta. That funding could go away, depending on how UK’s EU exit is negotiated.