What Brexit Might Mean for Canadian Consumers
By Kate Musgrove
June 24, 2016Brexit -- what we're calling the United Kingdom's recent vote on the question of leaving the European Union -- has been all over the news today, and I was curious to how it might affect Canadians. So far, the primary points of impact seem to be:
- An even stronger US dollar -- even though USD is already crushing CAD, a number of factors tied to the economic upheaval caused by Brexit could mean the US dollar get stronger while the Canadian dollar gets even weaker.
- A weaker British pound -- shortly after the results were announced the British pound tumbled to at a thirty-year low. If this were happening in a bubble, we could look forward to cheaper travel and shopping opportunities in the UK, but I assume the Canadian dollar will drop along with the pound and I'm skeptical we'll see any real deals.
- Adjustments on the trade side -- currently, the United Kingdom is Canada's third-largest trading partner. In 2015, Canada exported $16 billion (CAD) worth of products to the UK. Canada and the EU have a trade agreement called Comprehensive Economic and Trade Agreement (CETA), but now that the UK is leaving the EU, they'll need to strike a new, separate agreement, which could take years.
- A drop in the CPP -- about $20 billion of the Canada Pension Plan's assets are invested in the UK. Fortunately, that's only 7.5% of their total assets, but the value of those investments could certainly be expected to drop.
- You might see more Brits in your neighbourhood -- okay, this last one is pretty unlikely, but according to the Washington Post, UK-based Google searches for "move to Canada" increased 100-fold today.
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