Why Brexit May or May Not Matter for Philadelphia
While the U.K.’s unprecedented move to abandon the European Union in a referendum on Thursday sent global markets into turmoil, business leaders in the Greater Philadelphia region say it’s business as usual.
In the immediate aftermath, panic about the vote dropped the pound to its lowest since 1985, oil prices plummeted and the Dow and S&P 500 also took a dip, the New York Times reports. British Prime Minister David Cameron, who led the “Remain” movement that received 48 percent of the vote, announced on Friday morning that he will resign by October.
And as for the long-term economic ramifications of the severance, it may be too soon to tell.
“From an economic standpoint, business goes on, life goes on,” said past British American Business Council president Howard Silverstone, director of Forensic Solutions an investigative accounting firm in Haddonfield, “We have to wait and see how this is going to pan out.”
Adding, “The U.S. and the U.K. are each other’s largest business partners, and I think that’s why everyone here from a business standpoint is looking to see how everything pans out. But when you’ve invested so much money in each other, you’re not just going to change.”
The U.K., with its relatively small population size and land mass, is the world’s fifth largest economy, and its roots in Philadelphia’s economy are not insignificant.
In the Metropolitan Philadelphia region in 2014, (Southeastern Pennsylvania, Southern New Jersey and New Castle County), the UK represented the third largest merchandise export market, with the region exporting $2.6 billion of its $26.3 billion in total exports that year to the UK. That’s behind Canada and Mexico, the region’s top two merchandise export markets that took in $6.4 billion and $2.8 billion in exports respectively for 2014, according to the U.S. Commerce Department International Trade Administration.
And according to 2015 U.S. Census data the UK is also the third largest merchandise export market for the state of Pennsylvania and the state of New Jersey.
“Although in the short term we will see volatility and turmoil in markets as they adjust to this new direction for the UK, I think the UK and Europe will remain strong markets for Pa. and N.J. companies,” said World Trade Center of Greater Philadelphia president Linda Mysliwy Conlin, citing the need for the United States to move forward with the proposed Transatlantic Trade and Investment Partnership with the European Union and develop separate trade agreements with the UK.
Economic development leaders from the World Trade Center of Greater Philadelphia and the Economy League of Greater Philadelphia, recently outlined a plan to accelerate the growth of exports in the Philadelphia region, which was the 11th top exporter metro area in the country in 2014 behind metro areas like Houston, Detroit and New Orleans.
There’s a need to build on the area’s diverse export economy and get small and medium-sized businesses in the area to recognize their potential for exporting, Conlin said, where every billion in exports creates 5,600 jobs. In 2014 the region’s largest export industries were chemical manufacturing, financial services, travel & tourism, the tech sector and transportation equipment.
“Regardless of what people are speculating on, trade policy is a top priority for the U.S., Britain, and the EU, and it will take time to enact the changes,” said Conlin, “And my expectation is that it will be done with the understanding that there’s [a lot] at stake.”
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