Brexit could mean declining sales for online retailers
On Thursday, June 23, more than 30 million citizens of the United Kingdom voted on whether or not to leave the European Union, with 52% of citizens voting to leave.
Global economists are trying to figure out what this means for their own country’s economy – and the United States is no different. Some even wonder if this will signal an economic crisis.
"I wouldn't call it a crisis. There's a - financial markets are reacting negatively, but financial markets often overreact," remarked Nelson Mark, Notre Dame International Economics Professor.
Mark says global stock markets are just doing what’s expected in the aftermath of substantial economic and political change. "The markets don't like uncertainty, and that's the main thing is that there's a lot of uncertainty going forward, as to how this thing will play out," he says.
In terms of the state of Indiana, Professor Mark doesn’t think we’ll endure any major consequences. "I think the impact to someone in Indiana is going to be secondary," he states.
This is true, even though Indiana and the UK have significant economic ties.
The 2014 Indiana Economic Development Corporation report says the United Kingdom is Indiana's largest European investor.
Further, the report states at least five global, UK-based companies are in the Hoosier state – and more than 29,000 Hoosiers are employed by at least 80 British firms.
However Professor Mark contends he doesn’t believe this historic vote will hurt our economy directly.
"Our livelihood is tied to the resources that we have in this country - the capitol and the labor and the technology, and in the long run, none of that's gonna change," Mark states.
However, the same may not be true of online retailers. Some think online merchants could take a hit, at least in the short term.
ABC 57 reached out to Don Davis, Editor-in-Chief of Internet Retailer Magazine which publishes research on the online retail industry. Davis says UK shoppers do big business in the U.S.
“What is true for sure is that, consumers in the UK are avid online shoppers. The web accounts for 13% of retail sales in the UK, which is the highest in the world. And 54% of UK consumers have bought from websites in other countries, mainly from the United States. So, there's a lot of business being done this way – over 200 of the top 500 online retailers sell to the UK. So yes, if anything changes in terms of tariffs, customs, shipping operations […] anything, in U.S. dollars is going to be more expensive.
Davis says he would expect that at least in the short term, sales from Britain for U.S. online retailers will decline.