EU’s Stocks Struggle As Brexit Issue Gets Even More Complicated

Business February 22, 2019

It would seem that the European Union is in the midst of a chaos with the stocks falling down due to the Brexit issue with the United Kingdom. On the last trading day of the week, European equities remained low. One of the reasons is because of the reaction of the investors based on the comments of the Federal Reserve. One of the biggest downfalls was the 1.41 percent loss from the oil stocks, auto stocks fell by 1.89 percent while the banking stocks fell at 1.17 percent. Experts believe that once the Brexit issue ends, the real change will be seen but it would still be uncertain what kind of effects it will bring.

The stocks for the European market failed to reach its goal as a rebound while dropping 2.2 percent SXXP.

Europe’s Stock Crisis Continues

With the continuous downfall of the banking stocks, one of the sectors, UBS, seemed to have lost more with 2.65 percent. One of the reasons for this is the lawsuit that was filed by the Department of Justice of the United States against the said bank because of how much its investors lost due to the mortgage-linked securities.

Meanwhile, tons of investors have decided to monitor a certain incident in Italy. This is due to the economic forecasts of Rome according to the European Commission last week.

Italy caught everyone’s attention with its decision to forge ahead on the expensive fiscal plans.

In a statement according to the president of Eurogroup Mario Centeno, he met up with the finance minister of Italy and he was told that he has no intentions of rowing back on the controversial 2019 spending plans of their country. This is beside the reduction of the budget deficit that was ordered by the European Union since it may consist as a suicide for the economy of Italy.

Brexit Deal Explained

Another major issue the entire European nation is facing at the moment is the Brexit deal. There are still a lot of people who does not fully understand what it means and now it will effect them. It started in June 2016 wherein there was a referendum regarding how the United Kingdom should stay in the European Union or leave. This led to a vote wherein more than 30 million participated and the vote for leave won with 51.9 percent. It has been known for decades how the European Union consists of 28 countries and each nation pays to be a member with a special way of having access to one another in different ways. It is like where people can move from one country to another without having the need to get a visa. The reason why the European Union was created was to avoid wars against one another since this started just after the Second World War.

UK Pound dropped against the US dollar in relation to the decision that was made last Saturday with the Brexit Deal.

Last Wednesday, Prime Minister Theresa May revealed that she along with her cabinet support the deal but she is still going to push the deal through a divided parliament. In an interview with the media, the prime minister said that this will then be a massive step since it will allow them to finalize a decision soon. However, it would seem that despite the decision being a national interest, more and more government ministers in the United Kingdom continue to resign. Once the country leaves the union, it would lead to new trade barriers that businesses in most European countries will face.

Economists believe however that despite this chaotic Brexit deal that has been going on for years now, both the pound exchange as well as the euro will improve. This is despite how much the pound has been going down since the referendum was revealed in 2016. After all, the UK managed to avoid a recession with the economy going down because of this issue. It was also reported that there may be a possible party rebellion plan against Prime Minister Theresa May. Members of May’s team is slowly getting away from her because of the decisions she has been making. This is despite the fact that it is not yet certain after the parliament will approve the deal.