Brexit has been the big story in the news for the last week. As a result, the questions have started floating around: Will this have an impact on us in the US? What does it mean for the world economy? And most importantly, as preppers, what should we do in response?
Here is a brief overview of Brexit, its impact on the world and what it means for preppers.
What is Brexit?
The European Union consists of 28 members throughout the European continent and “allows free movement of goods, capital, services and people between member states” (source). Britain has been a member of the European Union since its formation, but in a narrow vote on June 23, 2016, it voted to leave the European Union and become an autonomous state.
Why did Britain Leave the EU?
The Brexit vote came about due to several issues concerning the British people and government, mostly concerning the economy, trade and immigration.
1. The EU imposes too many restrictions on British lawmakers.
2. All EU member countries must adopt the Euro as their currency by 2020. The British Pound has historically been much stronger than the Euro, which is vulnerable to having its value brought down by much weaker countries (such as Greece.)
— Survival Life (@SurvivalLF) June 30, 2016
3. The EU is soft on immigration, allowing immigrants to flow freely into member countries and offering them employment and benefits. Many UK citizens and parliament members want to take a tougher stance on immigration.
4. Many feel that the EU is manipulating the British government, and they don’t like the fact that EU law is supreme over British law.
What Were the Immediate Effects of Brexit?
In the aftermath of Brexit, the Pound continued to weaken, the UK’s credit rating dropped, and stock markets around the world experienced big falls. Prime Minister David Cameron announced his intention to resign. Scotland, which overwhelmingly voted to remain in the EU, is considering holding another vote on the issue of separating itself from the UK in order to return to the EU on its own It looks like the UK’s future will be unstable and chaotic, at least for a while. We have yet to see whether the decision to leave the EU will be beneficial for Britain in the long term.
How Will Brexit Affect the Economy?
Economist Scott Sumner, director of of the Program on Monetary Policy at the Mercatus Center at George Mason University, had this to say about the world economy in the aftermath of Brexit:
At this point (midnight) the global economy has been hit by a negative monetary shock, one of the biggest in years. ….
I’d emphasize that this is an almost purely a monetary shock—in real terms it makes little difference whether the UK is in or out of the EU (especially in places like the US and Japan). It’s monetary. That means the ultimate effect depends ENTIRELY on how the central banks react. Do they show imagination and leadership, or . . . do they keep acting the way they’ve been acting since 2007. We won’t have to wait long for an answer. (Obviously the markets believe that the central banks will not rise to the occasion.)
The odds of a global recession in 2017 just increased, by at least a few percentage points (albeit still less than 50-50). I think this also makes it slightly more likely that Trump will win, although he’s clearly still the underdog.
It has been predicted that London’s status as a global financial center could be compromised by the Brexit vote, and that the financial impact in the wake of Brexit could be similar to that of a war.
What Action Should We Take?
We’re all guilty of hearing news from around the world and thinking to ourselves, “That could never happen here.” The truth is, the economy is more unstable than ever, and all it takes is a small political shift to send the country into a deficit or a depression. As preppers, we should always keep our ears to the ground and be prepared for “the big one.” We don’t know when it will happen or what will prompt it, but an economic crash can happen quickly, and those who aren’t prepared will lose.
Here are a few things all preppers can do now to be prepared for a financial crisis.