British lawmakers are set to vote Tuesday on whether to approve Prime Minister Theresa May's Brexit deal that would take the country out of the European Union.
Whatever the outcome, the world's fifth-largest economy is set to take a massive hit — and so could the U.S.
Brexit has already proven its potential to upset other economies. "With the original referendum with respect to Brexit … if you look at the Dow, there was a tremendous drop post the vote," said Tifphani White-King at Mazars USA.
The Dow Jones Industrial Average lost 608 points, or almost 3.4 percent, the day after the vote — and the pain didn't stop there. Global markets lost $2 trillion in value. The U.S. dollar increased in value, and "that's not always a good thing," White-King said. A higher dollar makes U.S. exports more expensive for buyers in other countries. It also means stocks and U.S. investments are more expensive for international buyers.
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"As we get closer to [Brexit date] March 29, the amount of uncertainty is going to increase," said Peter Earle, economist and research fellow at The American Institute for Economic Research. "That's going to affect the markets."
Not only could stocks take a hit, but so might bond yields "as investors and different entities in other markets jump into government bonds for safety," he added. And that would mean investment and retirement accounts for regular Americans.
There's a more direct impact on U.S. businesses: "Many American businesses use the U.K. as their doorway to the E.U.," Earle told NBC News. "With a hard Brexit, that's going to cause a lot of complications for U.S. businesses." Companies will find it harder and more expensive to move goods between the U.K. and rest of Europe, with delays, tariffs, and more paperwork.
Even travel for salespeople, technical personnel, and executives will be more difficult. What used to be a quick trip from the U.K. to the continent or back now would require more time clearing customs and less assurance of easy movement.
While none of this is directly apparent to U.S. consumers, "It eventually works its way into the consumer level," said Johan Gott, a principal at management consulting firm A.T. Kearney.
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The biggest problem for businesses may be that they aren't preparing sufficiently. According to Gott, "by and large, the U.S. focus in the business community has been very much on China, on steel tariffs, and to a certain degree the possibility of U.S. auto tariffs, which could be very disruptive."
"Businesses can deal with almost anything if they have warning and things are gradual," Gott said. "Right now, we're seeing a two-month window and no idea of what will happen." And no idea how bad things might get with the lack of preparation.
