The unexpected outcome of the June 23 Brexit referendum in the United Kingdom caused shudders throughout Europe and most of the rest of the world. But in Rochester, the reaction was more like a shrug.
The vast majority of participants in this week’s RBJ Daily Report Snap Poll on Brexit said the U.K.’s decision to leave the European Union will have little or no impact on their business. Nor do most think Brexit will prompt them to realign their investment portfolios, even though in the two days following the vote stocks on U.S. exchanges fell nearly 5 percent.
The local reaction is understandable. After all, many local businesses do not export to the U.K. or EU, and stock market volatility is nothing new.
But even indirectly, Brexit could have significance for the regional economy.
Rochester long has been a hub of international business. Though downsizing has diminished trade stalwarts like Eastman Kodak Co. and Xerox Corp., local companies still produce billions of dollars of exports annually. A good number of them also have operations or partnerships abroad.
Even without Brexit, these are challenging times for international business. After a long period of substantial growth, interrupted only by the Great Recession, global export volume has flattened in recent years. Exports from New York dropped more than 9 percent in 2015; in Rochester, they have been declining annually since at least 2010.
In the days following the Brexit vote, the U.S. dollar has strengthened sharply against the euro and other currencies—which make U.S.-made goods more expensive in foreign markets. U.S. exporters will need to work even harder now.
A big unknown, of course, is whether the U.K. referendum will lead to similar votes in other EU nations. Further unraveling of the European political and economic community would have ramifications that are hard to predict.
Uncertainty rarely spurs economic growth, and protectionism never has been a path to prosperity. With Brexit, we could see more of both.
The chances Rochester would remain unaffected? Slim to none.
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