The United Kingdom’s vote to leave the European Union could have a trickle-down effect felt as far away as Charlotte.
U.K. voters favored leaving the European Union 51.9 percent to 48.1 percent Thursday. England and Wales had “leave” majorities, while every council in Scotland had “remain” majorities.
The “Brexit” could sway how corporations spend money and how they trade, how the Federal Reserve controls the cost of borrowing money and how Americans buy homes, experts say.
In premarket trading Friday morning, Bank of America was down 7 percent and Wells Fargo was down 5 percent.
In Miami, Charlotte Chamber CEO Bob Morgan said he’s watching the market to see how investors react to the British vote. “We’re in uncharted territory,” said Morgan. “In a week of good news for our banks with them passing stress tests, now all eyes shift to Europe.”
Before Thursday’s vote, Mark Vitner, a Charlotte-based economist at Wells Fargo, and others said even the possibility of a Brexit at a time when the global economy remains on shaky footing could delay when the Fed decides again to raise short-term interest rates, the cost for banks to borrow money. That could already be pushed back after a disappointing jobs report earlier this month: The U.S. Labor Department reported that employers added 38,000 jobs in May, the fewest since 2010.
“A U.K. vote to exit the European Union could have significant economic repercussions,” Fed Chair Janet Yellen warned in a speech in Philadelphia last week.
The “yes” vote could impact the roughly 600 companies from the European Union that have operations in Charlotte. Of those, 118 are from the U.K., according to the Charlotte Chamber.
Chamber officials said they don’t see any immediate ramifications for member organizations from a “Brexit,” unless the U.K. falls into a major recession because of it.
At the U.K.-based Compass Group, which employs about 5,000 in the Charlotte area, executives were monitoring the Brexit situation, but didn’t expect a “yes” vote to have a major impact on operations here, spokeswoman Veronica Ospina said.
“It’s on our radar, sure,” Ospina said before the vote. “(But) in initial conversations, it’s business as usual for us.”
One industry that’s definitely going to be affected? Trade.
According to the U.S. Census Bureau, the U.K. is North Carolina’s seventh-largest export partner, accounting for 3.4 percent of all exports, and the sixth-largest import partner, accounting for 5.4 percent of all imports.
Meanwhile, if you’re an American traveling to Europe, Vitner said, you probably won’t have to worry about the Brexit creating any major swings in foreign exchange rates.
Britain already has its own currency – the pound, which equals $1.42 now – separate from the euro, which equals $1.13.
“There may be some short-term fluctuation, but I wouldn’t expect to see dramatic moves,” Vitner said. “What seems to be more important for foreign exchange rates is weakness in eurozone.”
Staff writer Joe Marusak and Bloomberg News contributed.