Italeave? Frexit? Czeck-out? Portugo?
The 28-member club will soon be down to 27 members, and vested interests on all sides are stirring the pot by questioning who might follow Britain out of the door next!
Viewing the issue from a ten thousand-foot vantage, the world is headed in the direction of alliances. From city-states to nation-states to free trade groups and unions, countries have slowly given up their sovereignty for the security of better-together treaties. Just like the United States of America and the Asian trade bloc (ASEAN), the European Union (EU) aims to make the whole greater than the sum of its parts. One monetary system, one political system, and one defense system. Unfortunately, however, no one system for measuring progress.
Frustrated with out-of-control immigration, right-wing politicians in a near bankrupt Italy have been some of the most vocal against Brussels. Current Prime Minister Giuseppe Conte formed a coalition with Euroskeptics in 2018 but ruled out leaving the group after witnessing Britain’s unruly disentanglement. Markets won’t mind that at all!
A further exodus of immigration could escalate the risk of dropouts, with Italy, Greece, and Spain, potentially forced to absorb higher numbers in the years to come. If the UK fares well post-Brexit, Denmark could follow suit (it’s already using its own currency), and a recent poll in the Netherlands shocked political pundits by revealing a majority in favor of Nexit!
But one country’s trash is another’s treasure – other nations want in! Turkey’s been knocking on the door for years, but an abysmal human rights record and weak economy hold it back. Albania also sees the wealth of Europe’s major economies as the solution to its own money problems. Macedonia, Montenegro, and Serbia await their invitations, too.
It seems likely that more countries will join the alliance than leave it over the next thirty years, but as 2020 dawns, investors need a hedge for every scenario!