Brexit and what it means for Alberta

By Laura Bohnert

On Thursday, June 23, a referendum was held to determine whether or not the UK should leave the European Union, and as the world looked nervously on, Leave won the vote by 52 per cent for, to 48 per cent against, marking the start of the controversial and globally disconcerting Brexit.

With more than 30 million people turning up to vote, the referendum marked the highest turnout in a UK-wide vote since the 1992 general election, and despite the high turnout, the results have left a lot of people in a state of alarm.

The EU is an economic and political partnership that began after WWII when 28 European countries began a collaboration that was intended to foster economic co-operation and growth. Since then, it has developed into a single market that has allowed goods—and people—to move around as though in one country.

Brexit will obviously have a major impact on the countries involved (presently and formerly) in the EU, particularly for Scotland and Northern Ireland, who voted to stay and are now being forced to leave due to the majority of the vote. For Scotland, this may mean a second independence referendum, and Northern Ireland may be looking at a reunification vote.

Of course Brexit carries a significant global implication as well.  It threatens to hinder the global growth outlook, especially if the UK’s decision stirs other European countries to follow suit and abandon the EU. Brexit has already created a great deal of uncertainty in terms of trade, business negotiations, and stock markets, and could ultimately lead to the unraveling of the European Union, which would plunge the economy even further under water.

And that potential turnout could be even more disastrous for Canada, whose economy has already been shaken. The Canadian dollar plummeted right alongside the British Pound the moment Brexit was announced.

And Brexit isn’t leaving things looking very optimistic for the housing market, either—especially in Alberta, where housing costs are already in an economy-based turmoil. The Bank of England could soon cut interest rates, which means the US will likely delay plans to hike their rates in September, and Canada’s interest rates will almost certainly remain low. That will further fuel those hot housing markets, pushing housing prices even further out of reach if they aren’t there already. Toronto and Vancouver are expected to take the biggest hit.

Of course, Brexit is hitting the business sector hardest. Companies doing business with the UK will need to rethink their strategies, putting the tens of thousands of jobs at Canadian firms in the UK at risk, and exports will more than likely be reduced as well. Canada’s Comprehensive Economic and Trade Agreement (CETA) with the EU is now under review, and with the UK appearing as a separate entity, Canada could lose out on some of its benefits, which is not welcome news to Canada’s small open economy.  The UK represents Canada’s third-largest export market and was worth close to $16 billion last year.

Despite its export-based economy, Alberta doesn’t stand to feel Brexit’s impacts in the same way that Ontario or Newfoundland will. With less than one per cent of the province’s export market tied up in the UK, Alberta is among Canada’s least affected provinces—at least in terms of trade and exports. However, with the majority of the globe shaken by the vote, it doesn’t seem likely that any economy will walk away from this unscathed.