By Mohamed El-Erian
This is what the world might look like in June 24 if the "Leave" camp won the referendum the previous day if the UK should remain part of the European Union
the currency markets are in turmoil, with the pound down 7 percent to 10 percent and the euro down about 3 percent to 5 percent. Stocks are also under considerable pressure as investors try to price largest institutional uncertainties and knocked on economic growth.
Prime Minister David Cameron announced his resignation, leaving his Conservative Party in disarray as it tries to understand how to unite behind a new leader after a divisive debate in the months preceding the referendum. Scotland seeks to revive its bid for independence. The Irish are wondering what will happen to the free transfer of goods and people between the Republic and the North.
The rest of Europe is stunned and worried about a domino effect. Meanwhile, those who supported the release of the United Kingdom of the European Union to seek to ensure that their victory is not transformed in check, especially as some members if Parliament will consider the procedure for means circumvent the vote on leave.
human nature being what it is, a media frenzy feeds a blame game over who caused the departure of the UK from the EU.
The first target is the British electorate. Instead of throwing their ballots based on rational examination and calm questions, too many voters have come to be motivated by a single and very emotional topic :. Immigration
The electorate is largely indifferent to the charge. After all, it is the Conservative Party and Cameron in particular, who decided before the last general election a referendum was a good idea. Certainly, the political leaders of the country knew what they were doing, and had taken into account the welfare of the nation.
The answer is that Cameron's promise to hold a referendum Brexit was a necessity. The government was urged by the Independence Party U.K. the anti-establishment anti-EU movement gnawing based preservatives. The choice for conservatives was either lose the general election or the promise of a referendum during the next legislature.
UKIP, however, is jubilant over the outcome. The leader of the Party Nigel Farage and his associates are certain that short-term disturbances are a small price to pay for the opportunities available in the UK now that he is freed of EU restrictions. In their view, the accession of the United Kingdom in the union was a mistake from day one, as itself the European project was flawed
The architects of a united Europe say their vision of an "ever closer union." - economic, financial, social and political - has never been in doubt and in the extent that the UK saw the EU as a super-free-trade zone. this vision has evolved over decades of membership benefits.
But this optimism was rejected by the anti-establishment in the country traditionally regarded parties as anchor of a united Europe. These right-wing groups including the National Front in France, the AFD in Germany and the Danish people's Party, point to an economic system that has failed to keep its promise. How else to explain the slow-growing alarmingly high unemployment young people in some countries, the recurring financial drama in Greece and an inability to cope with the refugee crisis?
Like in a novel by Agatha Christie, there seems to be several suspects in this case, several guilty. But one factor carries the greatest responsibility for the debacle: The repeated failure of developed countries to provide strong inclusive growth. And this deficiency is allowed to persist, the more damage will be.
sophisticated advanced economies do not do well in periods of desperately poor growth, especially when the benefits go to poor segments of the population who are already better off, as was the case recently. In these circumstances, the list of improbable and unthinkable events is not limited to the emergence of anti-establishment parties, the fragmentation of those established, negative nominal interest rates, economic isolationism, increasingly ineffective if banks plants against non-productive, and the risk of a lost generation of young unemployed and unemployable.
the low-growth solution and not included in the advanced world is not a mystery, however. Many economists already agree on what is needed and why. What was unfortunately without persistence is the political will and capacity to implement these measures.
Perhaps the trauma of Brexit may "Sputnik Moment" would shock political leaders uniting behind a common vision of high inclusive shared growth and force an agreement on measures to avoid recessions and financial instability.
the realization that only a costly and painful economic and financial shock could trigger the appropriate policy response of the legislatures of both sides of the Atlantic is further evidence of the political dysfunction that, for too long, has placed too much of the burden of the policy on central banks overburdened and increasingly exhausted.
and we should not be reassured, even if the UK ended up voting to stay in the EU :. Yes, that would eliminate the immediate threat of economic and financial turmoil, but unfortunately it would do nothing to address the underlying growth defects of the system, which are certain to cause further turbulence
Bloomberg
[ad_2]
Read More: The Day After The U.K. Votes To Leave
0 Komentar untuk "The Day After The U.K. Votes To Leave"