Key tries to calm down the Brex-panic

The Brexit uncertainty has hit the financial markets, but more so because none of them were hedging against this result and so the dumping has been epic.

Prime Minister John Key says markets will come to terms with Britain’s decision to exit the EU, come back to a normalised state and then settle.

The United Kingdom yesterday voted to leave the European Union (EU) after a historic referendum.

Speaking in Auckland this afternoon, Mr Key said New Zealand companies should not worry about anything for now, re-negotiation obviously would take a while.

He said the government has had assurances from both Britain and the European Union that there will be no change in access for New Zealand goods or people until new conditions are negotiated.

The move by Britain to leave the European Union shocked global markets and caused the British pound to plummet to its lowest point against the US since 1985.

Mr Key said New Zealand would not be directly affected by the move, and the uncertainty in the markets that the British withdrawal had caused was likely to be the most immediate impact.

The markets appear to have overreacted but that was because they were surprised by the result. Britain won’t actually start to leave the EU for at least a few months, and then the process is one that takes some years. All of this means that today’s drops are about speculators minimising their losses rather than a loss of faith in the fundamentals of the British economy.

Give it a little while and the markets will be jumping back in on the good bargains sitting around.

Mr McClay said there would be a lot of uncertainty for a while, but New Zealand had a very strong relationship with Britain.

“We shouldn’t panic today, we are going to have to see what happens in the coming weeks and months. But this is going to be a very, very long process and I’m sure that New zealand is going to be able to sit around the table at the appropriate time to talk about trade and our historic trade links.”

But Export New Zealand said it was unlikely this country will be a priority for Britain when it comes to negotiating new trade agreements, once Britain has left the EU.

Export NZ executive director Catherine Beard said hopes should not be raised about a long-term deal.

“We’re down the bottom of the list, probably. So they’ll be looking to sort out their trade deals with their biggest consumer markets, first and foremost, and I would say New Zealand would certainly not be in the mix. And that’s why we quite often have to do trade deals with a bigger bloc of countries to actually get results.”

So, basically, enjoy the weekend and all’s back to normal come Monday morning.



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