ASCS Reaction | UK votes to leave European Union

After this morning’s shock news that the referendum for the UK to leave the EU has passed, people are now flocking to see the repercussions of this highly controversial decision. From a financial point of view, there are issues which will seriously be negatively affected over the short run, beginning with a huge drop in the value of the sterling of 10% in total; not even during the collapse of the Lehman Brothers was there such a decrease. Furthermore, there is a reported decrease on the price of oil, with a reported drop of 5%. To add to this, there is a fear of a domino effect within the EU, as many countries are considering following UK’s footsteps. There will also be effects on inflation, tourism, import prices, and work permits; sectors which have always been directly affected by the EU.

What effect will this have on Malta?

Some will argue that this will negatively affect Malta, but that is still to be seen. However, the UK’s decision to leave the EU will be a huge worry for expats due to the currency swings, as well as for all the Maltese students who spend months (and sometimes years) studying at British universities under the Erasmus Programme, a European Union exchange programme. Moreover, there may be a negative effect on imports from the UK, as Malta has a at least 8% of GDP based on exports of goods and services from the UK. To add to this, banking sectors of Malta (besides other countries) have links to those in the UK, and this may affect interest rates and even the future of such banks. There is still much to be seen regarding this case, and repercussions which have not yet been brought to air, as well as decisions which may continue to affect the future of the EU. ASCS hopes that this will not lead to a domino effect with countries deciding to fend out for themselves, and we call out for the unity of European countries in order to keep a stable economy, and try to fix any ruptures in our system.