The End for Europe? - Alldamoney

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The End for Europe?

The Brexit vote coming up on the 23rd of June has been hanging over markets for months, if the U.K. votes this month to exit the European Union; the world's worst fear is that it could lead to the demise of the 28-nation economic bloc itself.  While the consensus view is that U.K. citizens will eventually listen to their government and choose to remain in the European Union. However fear is beginning to show up within global financial markets, recent polls show that voters are tied over the issue. Given the potential political and financial shockwaves surrounding a Brexit vote, it’s not clear a map would do much good. Global markets are already sputtering as anxiety mounts about the impact on the world economy. EU President Donald Tusk goes so far as to say that it could spell the end of “western political civilization itself.”

The result is expected on June 24. If the U.K. eventually exits the 28-nation EU this would definitely affect a host of complex trade and deals that tie the country to the European bloc. Notably the main issue for British voters has been the EU policy on immigration, with waves of refugees entering Europe from the Middle East. While many experts see an initial period of uncertainty in the event of a pro-exit vote, they predict that the U.K. would stabilize in the longer term. But it's possible that it would not stabilize or that a Brexit would lead to a wider exodus of countries from the European Union. That fear has resulted in recent flight to safety trades in world financial markets.

Countries exposed to a potential British exit from the European Union will bear the brunt of a "Brexit” Ireland could bear the brunt of a "Brexit" more than any other U.K. trading partner, according to a "sensitivity index" from U.S. ratings agency Standard & Poor’s. Malta, Luxembourg and Cyprus all follow closely behind in terms of effects to their economies should Brexit occur. Malta and Cyprus, both of whom enjoy historical relations with the U.K, also benefit from high tourism and large expat populations from the U.K  to their countries.
"Their attractive climates have drawn a large population of U.K. pensioners… Cyprus also has a very large expat population working in the U.K., which pays an estimated 0.6 percent of GDP (gross domestic product) in remittances to Cyprus per year, the highest in Europe outside of the Baltics," according to S&P.
Another vulnerable economy is Spain. "Spain has large financial and FDI (foreign direct investment) exposures to the U.K., in particular through its large retail banking subsidiaries and telecom operations," said the ratings agency.

But one sure thing is before dawn on June 24, if an exit vote becomes clear, the EU’s top brass from Berlin to Brussels will be forced into damage control. In echoes of the Greek debt crisis, euro-area finance ministers may hold an emergency meeting as soon as that evening. Wild swings in the pound, more aggressive interventions by the Swiss National Bank and a ratcheting up of global instability rank as likely market reactions. Finally there will always be an England, but what's not clear at this point is whether there will always be a European Union.

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