Four Impacts Brexit Has On Canada

The world was greatly taken by surprise after the result on Brexit referendum was revealed on Thursday. The U.K leaving the EU will have a great impact on Canadians in various ways. Some of which are mentioned below.

#1. Fewer Exports For Them

Bill Morneau, the finance minister said most Canadian businesses invested in the United Kingdom market in order to have ease of access to the European market. The ongoing vote will cause them to change their plans and they will be waiting to see if there will be a need for any change in strategy. The ongoing battle in Britain could cause Canada to lose out on a lot of benefits of the Comprehensive Economic and Trade Agreement (CETA).

Britain is undergoing a review of their trade agreement with the EU. This could mean no more tariffs for goods exported by Canada into European countries, which is an advantage for business in Canada. According to Statistics Canada, the country exported goods worth about $16 billion to the United Kingdom in 2015, making it the country’s third-largest trading partner, with the U.S and China leading the way. If the UK continues to be part of the EU, Canadian business will have an advantage; now that the UK has left the EU, Canada will personally have to negotiate its trading arrangements with the EU and that will take time.

#2. Revenues Will Decrease

The governor of the Bank of England, Mark Carney who is a Canadian, cautioned that Brexit will affect the country’s financial state in an unsteady manner for the time being. This is not good news for Britain and the Canadians who have invested greatly in the United Kingdom. About $69 billion dollar – which made up 8.3 percent of foreign investment- was invested in the U.K by Canadians in the year 2014, from the report of Statistics Canada. A lot of money belonging to Canadians are in the United Kingdom, mostly from the retirement money, for instance, the Canada Pension Plan. The CPP Investment Board said about $20 billion which is 7.5 percent of the plan’s properties are based in the United Kingdom.

#3. U.S Dollar Gains Weight

Brexit can cause the economy of England to go into chaos and leave the dollar gaining weight over the pound sterling. Janet Yellen who is the United States Federal Reserve Chairperson advised that a hike to the dollar triggered by the indecision of the Europeans will put the U.S economy to a halt by unfavorable trade. It will become much harder for Canadians to go on trips and vacation to the United States if the dollar happens to become stronger.

#4. Real Estate Market Stays Unstable

The BMO chief economist, Douglas Porter together with Robert Kavcic who is a senior economist said that “In that event, the Fed will remain on ice even longer and Canadian rates will again probe all-time lows, keeping mortgage rates at an extremely low ebb and thus further fanning the flames in the domestic housing market.”