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THE UK people have spoken. Millions of Britons had their say and have done the largely unexpected by voting to leave the European Union. They defied advice from key political parties and prominent people and businesses and voted with their hearts, prioritising independence over the potential negative implications of a life outside the EU.
They have taken back their power from what they believe to be political union that no longer serves its purpose of being a facilitator of trade as opposed to a dictator of laws. They have redeemed control over their sovereignty, and most importantly control over immigration rules.
The implications of the vote are playing out negatively in markets across the world, with the pound falling off a cliff to the US dollar and recording levels not seen in more than 30 years. Volatility in currency markets breached pre-financial crisis levels as the euro also plummeted. Markets clearly underestimated the possibility of a UK exit.
The degree of the interconnectedness of global markets is such that spillover effects will be felt across global economies. South Africa will not be spared as emerging markets will bear the biggest brunt as risky assets get dumped for safe heaven investments like gold and sovereign bonds.
While the Brexit voters celebrate, the hopes and dreams of the Bremain supporters have been shattered. If this proves to be a catastrophic move for the UK and the global community, it can’t be blamed on the UK people who chose to vote with their conscience as opposed to being pragmatic as most expected.
The UK people, specifically leadership within the ruling party, need to comes to terms with the result and find a way to unite both camps towards a common goal. The people have spoken!
The key question now is, has the vote to leave by the UK weakened the EU? Might we see other quietly discontent EU member countries also follow suit in hope of winning back their own independence? Is this the beginning of the end for the EU, South Africa's biggest trading partner?
Therein lies the biggest risk and the potential contagion effects this might have on the global economy already faced with problems ranging from weak growth, deflation, high unemployment, and high debt to GDP levels, among others.
It’s a historic moment for the UK, more so the Brexit supporters. This will however have immense consequences for the UK labour market, specifically EU migrants staying in the UK.
* Nosibusiso Ngqondoyi is head of research at Novare. Opinions expressed are her own.
