Consciousness of Sheep
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For all of the howling and gnashing of teeth among the 48 percent of British people who lost the referendum on Britain’s membership of the EU, the rest of the world has remained largely unmoved.
While the Bank of England has taken action to bolster UK markets and to prevent the Pound going into freefall, markets elsewhere have been reasonably stable. There is a simple and unpalatable reason for this – Britain is an irrelevance in the global economy. As Matt Phillips at Quartz puts it:
“With all due respect, Britain doesn’t really matter that much. To be sure it’s upsetting to see the UK political establishment—both major parties—being torn asunder amid a significant turn inward for one of the world’s great democracies.
“But when we’re talking about the future direction of the global economy, Britain has been playing a diminishing role for decades.”
According to the IMF, Britain accounts for 2.4 percent of global GDP; down from 4 percent in the early 1980s. Most of that economic activity will continue despite Brexit. So the impact on global GDP is likely to be in the region of 0.1 percent. In global terms, the recent slowdown in the USA and the ongoing overcapacity problems in China are far more worrying.
