The European Union has been around for a few decades, and for the most part Americans are generally oblivious to its existence. The whole Brexit thing got a lot of media attention, and the issue has popped up from time to time, but Americans seem to prefer to deal with their own problems and the let the European be.
Except when it comes to the financial sector. American investors started to get pretty nervous when Germany and other major EU countries were debating about what to do with the Grecian economy. But even if you don’t have any stock market holdings, you want to think through why the EU actually does matter to all Americans, even in the absence of media coverage.
We will start with the aforementioned Brexit issue which was basically an issue with Great Britain wanting to separate itself from the EU. There was a referendum held, and the referendum passed. The result of that EU-related decision caused the Dow Jones Industrials to collapse some 600 points. That in turn caused a ripple effect in the general economy, though it was a minor one. But if you’re the person affected by the Brexit decision because you lose your job, or maybe get laid off, then it isn’t so minor.
It should also be mentioned here that the Brexit decision was not just one that affected financial markets. The referendum caused quite a stir on many political fronts, which in turn caused a good degree of angst between individual supporters of their chosen political party.
Then there is the persistent issue of the strength of the U.S. Dollar. A general rule of a stronger dollar is that it hurts companies in the United States who are exporters because the buyers on the other end have to pay more for American goods. In the world of international economies, the strength of today’s dollar can dramatically affect a company’s year-end bottom line. But it also works in reverse, so a weaker dollar will cost imported products more for Americans. So when you read the news about trade agreements involving the U.S. and EU, take note.
Of recent vintage is the political shenanigans going on inside the EU. The political landscape is changing, in part due to Brexit. There has been a surge in the influence of nationalist parties of many EU nations in regards to labor and trade policies. The trend is towards a protectionist approach, similar to what President Trump has been pursuing under his Make American Great Again theme. From an economic perspective, free trade benefits both the U.S. and the EU, so the future direction of the protectionist mentalities will affect the economies of both groups.
Many Americans gloss over the multinational nature of their companies, thinking that on most days it is business as usual. But when it comes to the issue of a U.S. company with considerable business holdings in one or more EU nations, the problem has the potential to affect the individual American right at home. Brexit is just one of many issues whose effect can ripple across the pond. Some companies in the U.K. are downsizing, meaning less bottom line revenue, and others are moving their entire operation out of the U.K. While the Brexit controversy continues, the EU is responding along political lines as well as financial, so both need to be given the proper amount of attention by Americans.
Some Americans keep an eye on the EU for financial reasons while others do it for political reasons. But the two have become inextricably entangled, and given the current changing political climate this is not something that will change over the next decade. What happens in the EU will directly affect Americans, everything from political discussions to paying the rent. With the upcoming 2020 election, a change in political party in any of the federal branches of government will very likely impact what goes on in the EU. That, in turn, will bounce back to the U.S. and affect everything from your stock portfolio to how much imported goods will cost.
If you are like many Americans who have been thinking that the European Union is an afterthought until it warrants the attention of the mainstream media, its importance has been growing over the past decade. You might want to consider bookmarking a page such as BBC to keep up what is going on from a British or other international perspective.