After months of campaigning, the British decided their fate on Thursday, June 23, 2016. The Brexit vote was about whether the UK wanted to remain or leave the EU. The key issues were immigration and the UK keeping its independence. The polls put the Remain side ahead of the Leave side in the historic Brexit vote, but in the end it was the Leave side that prevailed. 51.9 percent voted to leave the EU, while only 48.1 percent voted to remain. The vote’s results has divided the nation, leading to thousands marching in the streets in protest.

 

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Instability in the Markets

The results of the Brexit vote has led to much economic and political instability. If you’re planning a summer getaway, you might consider visiting the UK. In the aftermath of the Brexit vote, the British Pound fell to a 30 year low, making it cheaper for Canadians travelling to the UK. The Canadian Loonie also suffered, as investors bought up the U.S. greenback in droves. The Brexit results surprised investors, leading to markets plunging across the globe. Although markets have since shown signs of recovery, there’s still much uncertainty that lies in the months and years ahead. This has led to the UK’s credit rating being downgraded.

On the political front, British Prime Minister David Cameron announced his resignation. He will be stepping down in October. This has led to much speculation about who will be the next prime minister and lead the negotiations for the UK to leave the EU. David Cameron has said there’s no hurry for the UK to leave, but the EU has a different opinion. The UK could leave the EU as soon as two years. EU nations would like the UK to invoke Article 50 of the Treaty sooner rather than later to help bring stability back to the EU.

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How Canadian Businesses are Affected

The Brexit vote is bad news for Canadian businesses operating in the UK. The UK is an English-speaking hub for Canadian businesses looking to get their foot in the door of the lucrative EU. Although it doesn’t have any immediate implications, if and when the UK leaves the EU, it could mean Canadian businesses will have a tougher time accessing free-trade. This has left many Canadian companies considering leaving the UK for another country in the EU. In the short-term, this will hurt the profits of Canadian companies and lead to more instability back home.

What Should I Do as an Investor?

As an investor, it’s easy to panic after the Brexit vote and sell your investment portfolio, putting it all in cash, but for most that’s not the solution. If you’re invested for the long-term for a goal like retirement, it’s best to stay the course. The market has its ups and downs (we’ll automatically rebalance your portfolio so it stays the course). It’s important to not lose sight of your long-term investment objectives. If anything, the tumble in markets is a buying opportunity for investors. This sale won’t last forever, so take advantage while you can.