ORLANDO — Britain’s sterling currency fell on Monday to a 31-year-low against the dollar, while U.S. stocks also fell sharply in early trading – a vivid reminder of the financial uncertainly that’s been triggered since British voters opted last Thursday to vote to leave the EU.
The situation seemed to confirm the warnings by economists that the Brexit vote would have ripple effects. Britain’s 10-year government borrowing costs sank below 1 percent for the first time ever, analysts at several banks slashed their forecasts for the pound, and the Sterling hit a low of $1.3221.
At the same time, the Dow Jones industrial average was down 234 points, or 1.4 percent.
For the Orlando area, it’s become a waiting game to see if the Brexit vote has any impact on the region’s crucial tourism industry. Britain sends the second highest number of tourists, after Canada, to the Orlando area every year.
On the other hand, MSN.Money reported on Monday that the Brexit vote appears to have boosted interest among British and other European residents in buying an investment home in the United States.
“The Brexit vote also appears to have had a somewhat surprising consequence – it has at least temporarily driven U.S. mortgage rates lower as international investors look to America as a bastion of investment safety,” MSN.Money reported.
That could be an important factor for the Central Florida housing market, which has attracted a lot of international investors over the years.
“We are a resort lifestyle here,” said Justine Assal, who grew up in the U.K. but has lived in Orlando recently, where she organizes the annual BritWeek celebration.
“We have a very attractive lifestyle, and I think investors looking here will buy multiple properties sight unseen,” Assal said.
Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida, said it will take some time to understand the full impact of Britain opting to leave the European Union.
He said the Leave vote may have been driven strongly by opposition to the EU’s immigration rules, requiring member nations to accept refugees fleeing war-torn regions like Syria and other parts of the Middle East.
“It involves a significant surrender of a lot of sovereignty for the EU,” Snaith said. “And I think it’s that loss of sovereignty and that immigration crisis that has hit Europe and spread through the European Union because of the immigration laws from Brussels to the member states, that fuels a lot of the anger.”
Snaith predicted that Central Florida’s tourism economy would be impacted, particularly in the short run, since the drop in the value of the pound against the U.S. dollar would make a vacation in the Orlando far more expensive for British tourists. Once they do a currency exchange, the pound would have a lower value and the cost of hotels, meals, and theme park tickets would all be more expensive.
There’s a lot of continued uncertainly about what the vote will mean – on both sides of the isle.
Wendy Farrell grew up in Britain, and moved to Florida a decade ago to start a business called Signature Promotions in the Poinciana area. She said after 43 years being a member of the EU, Britain now faces a murky future.
“I’ve spent most of my life in the EU, as it was, and I have friends who own property all over the place in Europe,” she said. “Being part of Europe allowed them so much freedom of movement. I have friends who used to just jump on a plane and go to Italy for a day. That’s how easy it was to move around.”
Now no one is sure how this will impact those British residents who live in other European countries that are a part of the EU.
“It’s crazy, and it’s going to be interesting to see how it unfolds,” Farrell said. “I don’t know what’s going to happen. It’s going to be a wait and see.”
Assal said for those British visitors who have came to this region on a E2 visa to start a business, should be fine since they exchanged their currency well before the Brexit vote.
“Once the money has already been exchanged over here, they should be relatively okay because they’re now on the U.S. system,” she said. “We are a global community. We are not just individual countries anymore.”
Michael Freeman is an Orlando journalist, playwright and author of the book “Bloody Rabbit”. Contact him at Freelineorlando@gmail.com..