Brexit: reason to panic or business as usual?

The Bulletin talks to local experts about the British vote

Experts say don't panic in the wake of the financial markets tumbling following Britain's historic vote to leave the European Union.

The world, and financial markets, were reeling on Friday as news of the decision by English voters to exit the European Union broke.

The British pound hit historic lows, the Canadian dollar fell a full penny, gold shot up, and stock markets were down.

What about local impact?

Mayor Don McCormick said Kimberley could see a small tourism impact.

“Uncertainty affects all aspects of the economy, so until details are sorted things like tourism could see some negative effects,” he said. “People tend to defer those expenditures first. We have a decent volume of tourism from the UK and Europe, so it is possible we will be affected to a degree. This is especially true if currencies fluctuate wildly.

“Fortunately the vast majority of visitors to Kimberley are from Canada (Alberta, BC and Saskatchewan) and not likely to change their plans because of this.”

“I once heard a phrase that ‘voters are never wrong,’” said Kimberley Chamber manager Mike Guarnery.

“We are in a position (where) we need to accept the outcome from the decision the majority of United Kingdom citizens have made about their future in regards to their participation in the European Union.

“We saw a dramatic reaction from the global markets, and as economists provide their evaluation to world leaders about possible ramifications of this change, individuals may want to speak with their financial investment representatives and see how it will impact their portfolios.

“Time will tell if this is going to be problematic for business agreements in Canada, or a Y2K phenomenon that really didn’t happen.”

Now is not the time to panic, said financial advisor Jim Scott of Kootenay Savings MoneyWorks.

“My advice is to assess your long term goals,” Scott said. “We saw this volatility in 2008, 2011, 2012 and now in 2016. Generally speaking, it shouldn’t impact long term financial goals.

“If you are a trader, it’s a huge opportunity as, oftentimes, markets overreact to events like this. I’m certainly no expert, but if you are a long-term investor, just take a deep breath.”

Scott said he doesn’t believe interest rates will be moving much from the current low rates.

“Central banks have indicated they will be providing liquidity. It’s not a time to panic. Individual stocks will change, but overall the TSX is only down one per cent this morning (Friday, June 24).”

As for mortgages, again Scott said don’t panic.

“If it’s time to renew, don’t be concerned. But I wouldn’t be jumping out of a current mortgage just to get into a new one.”

One also has to keep in mind, he said, that while the vote was shocking, Britain will not actually be exiting the European Union for two years, after much negotiation.

“A lot will happen in two years, some good, some bad,” he said.

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