Pay attention to Brexit now, it is a trending term that’s going to continue trending for a while. Ever since 51.9% of the UK population voted to leave the European Union (EU), the world, especially on the economy front, has been taken by storm. So much so that it’s making the apathetic tune-in and relegating celebrity hoo-has (you know, like the naked Taylor Swift and Donald Trump in Kanye’s new MV) to irrelevance. In this first of a two-part series blog, we give you the lowdown of UK's divorce from the EU and what it means to you as a Singaporean.
What is Brexit, you ask? As the portmanteau word suggests, the possibility of Britain leaving the EU for economic independence has officially become a reality. And within 24 hours, a great many things have happened including forex upheavals, British Prime Minister David Cameron’s resignation and the Brits crapping their pants over the gravity of their votes. In other words, nothing good seems to be coming out of Brexit. According to UK forex company World First’s Chief Economist, Jeremy Cook, Brexit is an unprecedented event and Asian currencies are expected to be drastically affected. The only certainty for financial markets in the near future is, well, uncertainty. Singapore’s Prime Minister Lee Hsien Loong has also echoed similar sentiments over the fact that we are all “part of the same globalised world”.
Sure, we might be getting our fair share of the worms now that the can has been opened, but it’s not all doom and gloom. Within the (go)bearish outlook, there are several silver linings. Don’t believe us? Take a leaf out of Warren Buffet’s book: be greedy when others are fearful. With the British Pound plunging to new lows since 1978, now is indeed the time to be greedy and indulge in all your wanderlust and shopping.
1. Fly to UK on the cheap
At the time of this article, one Singapore dollar is worth £0.54 after a 9.8% drop in exchange rates. This means traveling to the UK and living it up with supreme fish and chips and live BPL action can be done on the cheap. Considering that it’s the mid-year travel season, expect many people in and out of Singapore to share the same idea. If you’re a forward-thinking person, you would try your utmost to book the front-most seat on the class you’re flying in so you won’t have to suffer an insufferable wait at the customs. As far as we know, the increasingly aggressive noise over Brexit is only happening online, so safety on the streets shouldn’t be a concern if you’re worried about strikes and protests.
2. Flying to anywhere in Europe on the cheap
They may not share the same currency, but backpackers may have something to cheer about. To keep up with a possible explosion in UK tourism, fellow EU countries might offer attractive package to lure travellers into a tour of Europe. If you’re one of the many Singaporeans contemplating a journey to the north to see the lights, start monitoring prices on travel booking sites.
3. Be greedy when others are fearful
In light of the Brexit, the shrewd opportunist would very well pounce on the Pound to hit pay dirt in the future. Britain may not be one of the founding members of the EU, but they are undoubtedly one of the major trade players on the continent that contributes no little to the EU budget. If you’re an optimist playing on this fact to see them bounce back, hoarding the Pound might be an investment lobang worth risking your money over.
4. Wardrobe revamp
Popular UK online fashion retailer ASOS shut down for 24 hours as soon as Brexit rocked the nation. When they came back live, we were treated to a massive 50% sale. So is shopping at Mr Porter. It’s going to be a busy, busy period for Singaporeans looking for more stunning deals on top of the Great Singapore Sale, and then creating their own Project Runway moments.
5. Drop in business from UK
For us, it’s a fantastic time to be booking plane tickets to London. Who’s to say the Pound is not going to depreciate further, right? On the flip side of the coin, that spells bad news for our tourism because it’s making it expensive for Brits to venture out of town. In the bigger picture, riding on PM Lee’s emphasis on our interconnectivity, it would put a further dent on our already stagnant economy and bleak job market. Therefore, you might want to hold off that Project Runway plan of yours and squirrel away your income instead.
6. Traveling to Japan and the U.S will be a lot less worthwhile
In Cook’s commentary on the Brexit, he stated that the Japanese and American markets are the primary safe havens investors might be diverting their money into. With the vested interest in two of Singaporeans’ top travel destinations, the increase in demand for the Yen and USD means we could be looking at unfavourable exchange rates. In the next few years, Instagramming the sights and sounds of both the Big Apple and Land of the Rising Sun could get you a lot less bang for your buck.
And your friends’ double taps.
That’s quite all right; unless we absolutely have to fly there, we’re happy to stick to the supreme fish and chips and live BPL action.