Brexit Backlash on U.S. Economy

Although top finance officials claim the damage caused by the U.K.’s exit from the EU isn’t enough to trigger the U.S. into a contraction, a falling pound and euro could cause the dollar to surge and further dampen demand for American exports. This according to last Friday’s article in the Wall Street Journal.

The U.K.’s exit is expected to sting the U.S. economy and upset the market as well as corporate strategies of domestic companies based in London. U.S. officials are concerned that our economy will weaken if growth in the European Union, America’s largest trading partner, suffers. Federal Reserve chairwoman Janet Yellen told Congress that the decision would “usher in a period of uncertainty” and fuel volatility in world markets. Analysts have said that this would cause the Fed to delay raising interest rates, possibly into next year.

One important question is how the event will affect U.K. trade agreements signed or being negotiated under the EU. In April, President Obama said that the U.K. would go to “the back of the queue” if it voted to leave the EU. The day after the vote, he gave assurances that the U.K. and the EU “will remain indispensable partners of the United States even as they begin negotiating their ongoing relationship to ensure continued stability, security and prosperity.”