PITTSBURGH (KDKA) — The British vote to leave the European Union may have set Wall Street into a tumble, but some local economists are not worried in the long-term.
“The direct impact on the U.S. economy is relatively small,” PNC international economist Bill Adams told KDKA money editor Jon Delano on Friday.READ MORE: Pittsburghers Have Mixed Reactions To Weekend Traffic Restrictions On East Carson Street
Adams says, while important, trade with the United Kingdom and Europe is a small part of the overall American economy.
“U.S. exports to the U.K. are just over a half a percentage point of our GDP (gross domestic product). Exports to all of the European Union is really just 2 percent of GDP, so the impact, if we have one, is more through sentiment and more through the financial volatility that we saw overnight and continued into the day today,” added Adams.
Still, Pittsburgh is an important part of that trading relationship, says University of Pittsburgh Prof. Ron Linden.
“The U.K., Britain, is the leading investor by far in the state of Pennsylvania and in the Pittsburgh region. It has the highest number of companies in the Pittsburgh region,” says Linden.
Roger Cranville is president of British American Connections Pittsburgh, a group that celebrates Pittsburgh’s unique connection to Britain that dates back to 1758.
“I think by Monday people will have got over the shock.”
So while our 401K’s, pension funds, and stocks may take a short term hit, companies that trade between this region and the U.K. won’t stop business.
“They’ll be very watchful about what’s changing, but I think on Monday there’ll be business as usual from a corporate perspective.”
“From the markets, they might take a little longer to stabilize but corporations aren’t going to stop doing business. They need business to make profits. I think they’ll continue to trade both ways across the pond,” notes Cranville.
One unpredictable — the long-term impact on the British economy.
“If the U.K. economy suffers from this, then it’s likely we will as well,” adds Linden.READ MORE: Man Accused Of Beating His 5-Year-Old Son To Death With Baseball Bat Could Face Death Penalty
But a majority of Britons are celebrating an historic vote to separate — or Brexit — from the European Union.
“The sun has risen on an independent United Kingdom,” declared Nigel Farage of the U.K. Independent Party.
The cheering masquerades the unknown economic consequences of the split.
While Britain will regain control of its own borders and European-mandated regulations some found stifling, its economy could pay a price in lost trade.
Nobody can predict whether leaving the EU will be a net positive or negative for Britain’s economy, there’s one positive for Americans.
As the pound and euro currency lose value against the dollar, goods from Europe are cheaper for Americans — and as the summer begins — it’s less expensive to travel there.
“You’re going to get a lot more pounds for your dollars when you go to the U.K., so get on a plane. Go to the U.K.,” says Cranville.
“Now is a great time,” adds Adams. “It’s on sale.”
Adams says exchange rates are great.
A year ago it took a $1.50 to buy one pound — today it takes just a $1.37.
The euro has dropped from a $1.50 seven years ago to a $1.11 now.
And check out some lower airfares to the U.K. and Europe from Pittsburgh.
“We’ve found some $500 roundtrip airfares to Europe on Air Canada,” says George Hobica from AirfareWatchdog.com.MORE NEWS: Upper St. Clair Family Starts Non-Profit Organization To Honor Son Who Died Of Kidney Disease
Hobica says Brexit makes great travel deals possible — at least in the short-term.