By Monsi A. Serrano
With the recent prediction of the surge in US$ against Philippine Peso which I mentioned in my previous column, another black eye hits the world and inevitably the Philippines due to the historical “BRExit” wherein the UK should remain a member of the European Union or leave the European Union.
Now that the die has been cast, the decision of the majority of the British rocked the political world as UK prime minister David Cameron announced his resignation and this consequently sent jitters to the global financial markets as reflected in the £-P exchange rate. Prior to the historic vote, the exchange rate was P68.80 for £1 pound, but after the result, it is only 64.70 per pound. Apart from that, the pound falls on its lowest to US Dollars since 1985. Here in the Philippines, the exchange rate of US$1 is P47.00 but the volatility would remain due to uncertainty of the effect of the BRExit.
What does BRExit really mean for markets, finance, and business? For our country and for the Filipinos living in the United Kingdom? The answer is, “No one really knows”. It leaves the UK and its people in the limbo. But in my own humble opinion, this would certainly stir up the market. It’s a self-inflicted wound that is not necessary, impractical and whimsical. The risk of breaking away from the EU posits more disadvantages than advantages to the UK. It means cutting off your relationship with your trade partners whom you have been working with for so many years and this means less opportunity for the Brits, the travel privileges around the 27 EU countries.
Apart from that, the economy of the UK will be affected and it is going to be weakened. Trade would be limited, and the UK’s produce would be forced to be marketed in other countries with so much added cost that would, of course, make the goods more expensive. The tariff, shipping cost, license and many more. In short, the BrExit is a disastrous move the way I see it.
The Filipinos and all other immigrants in the UK voted to remain because severing your tie with your partners is not good and at the same time high risk. While the UK may be rich as the Governor of England made a statement that they are well prepared for this and also ready to dole out £250 billion pounds to businesses who will struggle, the question remains is it worth it? On the other hand, the probable reasons of the breaking away of the UK from the EU is the trade and single market, the debt crisis in some Eurozone countries (Greece, Ireland, Portugal, Spain, Cyprus, Hungary, Romania, and Latvia), security and increasing migration from the Middle East countries. While that sounds a little bit bigot especially on the increasing migrations of Middle Eastern folks, it would be best also for the Middle East immigrants to reciprocate with kindness to those who open their doors to them. But with what happened to Belgium and France, one cannot avoid having that fear of having more Middle East immigrants in a certain country that is very peaceful and peacefully co-exists with other non-Middle East immigrants for so long a time.
With this decision to leave the European Union, so many uncertainties would remain in the fate of the UK. We can only wish and pray that this decision would really yield positive results to the considering that this move means pulling out of EU investments in the UK, precautionary savings amongst the households especially to our Filipino Immigrants and OFWs, volatile economy, reduced inflows of capital and a lower rate of potential growth. With almost 500,000 Filipinos in the UK, this might also affect the remittance to the Philippines.
Right now, the proponents of BRExit could only stick on to their myopic vision in life and hope for the best. Yes, UK specifically London has almost 17 million tourists in 2015 the biggest in EU country. They may have a lot of money to create businesses and help the struggling business as a result of BRExit. And while it is true that most of the multinational business with a European operation of which 40% are in London, for how long do they think they would stay? Obviously, given the result of Britain’s position to the EU based on the result of the referendum would imminently change everything and has a domino effect. Yes, sure there would be negotiations on the withdrawal agreement but not more than two years. But the fact remains, their decision to leave is irreversible and would mean an exit from the EU. let us hope and pray that the uncertainty would lead to positive certainty for both the UK and the EU.
Personally, I am not in favor of this. But what can I do, I am not a Brit. But I always believe in what the great Latin writer Publilius Syrus said, “Where there is unity, there is victory.” I myself who migrated to Canada before with my family chose to come back to the Philippines to make a difference in my small way.
So far, only the Middle East currencies are not affected for now by the plunge of sterling pound. Japan’s struggling yen gains from this. For the Philippines, we cannot remain complacent and keep on saying we are far from Europe. Remember, the Aristotelean Metaphysics that says, “Quid quid movitur, ab initio movitur”. (What is moved, is moved by another.”)
Editor’s Note: This was originally published last June 25, 2016 and here is the original link: