Britain's exit from the European Union is now a given. The British people have voted by a narrow majority 51.8/48.2 to leave the EU. What happens now to the UKl and to the world economy is pretty uncertain. David Cameron, Britain’s Prime Minister, has already made it official that he will step downin October, before the conference season, to make way for a new leader of the party’s choosing.
In the meantime, the markets have reacted to the decision rather badly. The FTSE 250, considered a close barometer of the UK economy, fell by 12.3 per cent before paring losses back to 7.1 per cent, while the pound tumbled to $1.30, before recovering slightly to $1.36 against the dollar.
The fall of sterling has been the steepest one-day fall ever seen. Against the euro, the pound dropped 7 per cent to about €1.2085 and the euro also fell 3.3 per cent against the dollar, its biggest one-day fall since the currency’s inception as markets recognized the risks this poses for Europe as a whole.
One of the industries that to some extent stands almost certain to lose the most is automotive, observed analsysts. The Society of Motor Manufacturers and Traders — upon receiving the Brexit news— immediately made the following announcement:
“The British public has chosen a new future out of Europe. Government must now maintain economic stability and secure a deal with the EU which safeguards UK automotive interests. This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world, and making the UK the most competitive place in Europe for automotive investment.
Britain's referendum and its result in exiting from the EU has sent stock markets around the world into decline. There are many uncertainties for the near future of Britain, Europe, and global markets, including metal prices.
Nevertheless, if automobile loses, it will definitely have a bearing on aluminium and steel prices or vice versa, but to what extent, is not yet clear.
This morning Aluminum futures along with other non-ferrous metals like Lead, Zinc, Nickel were down. Whether the trend persists and what implication it has on long-term metal prices, only time will tell.
