This is a guest post from Garvin Jabusch, Chief Investment Officer of Green Alpha Advisors, LLC
The UK has voted to leave the EU, and global markets, for today, are way down. But what, fundamentally, does it all mean? Why does a Brexit equal market turmoil? Will Brits stop all commerce, quit consuming, and cease all import and export activity? Will Europe? Will global trade falter?
No, the Brexit will cause none of that. And yet, some economists do see some declines as a possible outcome. As reported by the Economist, “the central estimate touted by George Osborne, the chancellor [of the UK Treasury], is that GDP may be 6.2% lower than it would otherwise have been by 2030, an annual cost that he reckons works out at some £4,300 ($6,000) per household.” The “than it would otherwise have been” is code meaning the UK economy will still grow between now and 2030, but perhaps a bit more slowly than if it had stayed in the EU. The UK Treasury’s “central” scenario is based on the assumption th…