Yesterday, citizens of the U.K. voted in a referendum to leave the European Union (EU). The historic vote has now made the British exit from the EU (dubbed “Brexit”) a reality. So, what does this mean for Florida?
This past Monday, Dr. Jerry Parrish, Chief Economist for the Florida Chamber Foundation, taped a segment on the Florida Chamber’s monthly Florida by the Numbers about the vote and the potential effects on the Florida economy if the U.K. voted to leave. In that video, he noted that it would have effects on both Florida’s international trade and international visitors.
Overall, there were more than 2.4 million visitors from the rest of Europe – and expected decreases in the value of the Euro will increase their travel costs for trips to Florida. With the expected decrease in the value of the British Pound, travel to Florida will also become more expensive for U.K. residents.
“In 2015, more than 1.7 million U.K. visitors came to Florida- that’s about 40 percent of European vistors and about 15 percent of all of Florida’s overseas visitors. In fact, visitors from the U.K. make up the largest non-Canadian visitor group Florida has,” said Dr. Jerry Parrish, Chief Economist for the Florida Chamber Foundation. “International visitors spend more and stay longer, and leave more sales and other tax dollars in our state. With more than $89 billion spent by visitors in 2015 in taxable sales, this is a substantial contributor to Florida’s general revenue.”
The vote by the U.K. to leave the European Union will also have the immediate effect of increasing volatility in financial markets, and will likely lead to reduced foreign direct investment in Florida. We know from history that increases in uncertainty and volatility typically have a negative effect on investment and trade.
The silver lining for Florida? Imports from both the U.K. and Europe should now be cheaper. Currently, Florida imports twice as much as it exports from the U.K.
Florida’s imports from Europe made up 23 percent of the total imports – totaling $16.9 billion in 2015. Those imports should become less expensive as the Euro falls in value versus the U.S. dollar.
Click here to watch Dr. Parrish’s full analysis from earlier this week on the potential impact of Brexit.