'Brexit': Global Economic Aftershocks
LINDA WERTHEIMER, HOST:
Last Thursday's decision by U.K. voters to leave the European Union sent the world's financial markets into something of a tailspin. The British pound plummeted to its lowest level in more than three decades, and the Dow Jones tumbled more than 600 points. We're joined now by NPR's Jim Zarroli who's been following the impact of Brexit. Welcome, Jim.
JIM ZARROLI, BYLINE: Hi, Linda.
WERTHEIMER: So what can we expect this week?
ZARROLI: Well, I'm sure a lot of people on Wall Street want to know the answer to that, too. There are just too many uncertainties. I mean, look at some of the questions that we're facing. We don't know what's going to happen to foreign companies that do business in the U.K. We don't know what's going to happen to British exports. Nearly half of British exports go to the EU. We don't know anything about immigration. You know, what about banks? Are they going to stay in Britain and muddle through or are they going to relocate to places like Dublin or Brussels? So there's a lot we don't know, and my guess is that's going to be reflected in the markets this week.
WERTHEIMER: Last week, we saw the pound fall sharply against other major currencies, especially including the dollar. Is that a silver lining for Americans?
ZARROLI: Well, that's - that is what Donald Trump says, right? He says this could boost tourism in Britain, which is - will not accidently help - not coincidently help his golf course in Scotland. And he is right about that. It'll - it should be cheaper for people to go to Britain as a tourist, at least for a while. But there are so many other things to consider. I mean, if you're an American company, you know, Starbucks or McDonald's, and the pound falls as it did on Friday, then your revenue is going to be hurt because the money you earn in Britain is worth less.
And then much more important than that - what if you make products in Britain and you sell them in Europe? Well, you know, presumably you won't be able to do that as easily now as you used to, or at least you'll need to, you know, you'll need to pay a tariff maybe. So over the next few months and really the next few years you're going to have to decide do you want to stop doing business in the U.K. or at least gradually or are you going to shift some of your operations into the EU?
WERTHEIMER: What do you think is going to be the timetable here for Brexit?
ZARROLI: Well, that's - you know, Britain has to invoke what's called Article 50 of the EU treaty, which says they want to leave. It begins the process. Then they have two years to leave. A lot of people, including, you know, government officials in the Netherlands and France are saying, you know, don't drag this out. All this uncertainty isn't good for the EU. If you're going to go, go. But of course they can't force the U.K. to leave. And a lot of people like Angela Merkel, the chancellor of Germany, are saying, you know, don't go so fast. It's almost like they're hoping there's some way to rescue this.
WERTHEIMER: NPR's Jim Zarroli reporting from New York. Thank you, Jim.
ZARROLI: You're welcome.
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