Question

Will England’s exit from the EU economically hurt the United States? Explain.

Answer 1

The answer to this question is subjective. In the short run, England’s exit from the EU will definitely hurt US economy. However, long run effects can't be fully predicted.

Short Run view:
One day after the Brexit vote, currency markets for Euro and Pound were in turmoil. The euro fell 2 percent to $1.11. Pound also fell drastically. Fall in both of these currencies increased the value of the dollar. This appreciation in the value of Dollar is not good for the US economy. This is because it makes US imports cheaper and exports costlier, causing reduction in the production, also it makes US shares more expensive for foreign investors (the Dow Jones index fell 610.32 points). As a result, gold prices rose 6 percent from $1,255 to $1,330.
Brexit dampens business growth for companies that operate in Europe. U.S. businesses are the most significant investors in Great Britain. They invested $588 billion and employed more than a million people. These companies use it as the gateway to free trade with the 28 EU nations.

Long Run view:
We can consider Brexit vote as a vote against globalization. It takes the UK off the main stage of the financial world. It creates uncertainty throughout the UK, and while US is stable, US stability means London's loss which could be New York's gain.