How Brexit will affect the US

Synopsis

The analysis indicates that while the UK is an important economy, it ranks as a pretty small export partner for the US. Consequently, Brexit is not expected to dramatically impact US growth. However, a loss of confidence across the European Union and a slowdown in the euro area could trigger significant effects on US growth. Financial links are crucial, as the Brexit vote has led to a flight to safer assets, reducing yields on government debt, which benefits US borrowers. This situation also reflects a bearish outlook on growth, raising concerns about potential financial instability. The strength of the dollar may lead to market tremors in emerging markets, where many corporates have borrowed in dollars. Overall, the turbulence surrounding Brexit is likely to result in a more cautious Federal Reserve, which was already hesitant before the referendum due to uncertainties regarding the market outlook and US exports.