It looks like the British will be leaving the European Union with much lighter wallets. U.K. household wealth has plummeted by a combined $1.5 trillion as a “direct result” of the vote to leave the EU, according to a new report on global wealth produced by Credit Suisse.
The loss of $1.5 trillion over the past 12 months translates into a 10% reduction in household wealth, according to Credit Suisse. Household wealth includes financial investments and real assets like housing. Debts are subtracted.
Only Mexico, Egypt, Russia, Ukraine and Argentina suffered larger percentage drops in household wealth than the U.K. Meanwhile, households in Turkey and Colombia fared better than those in the U.K.
Britain is expected to trigger EU exit negotiations early next year. The government’s strategy for the talks is not yet clear, but it’s unlikely that Britain will be able to maintain access to Europe’s single trading bloc.
“The [U.K.] outlook is very uncertain, both for the economy and household wealth,” Credit Suisse said.
I’m not sure this really makes sense. If the pound falls in relation to other currencies that doesn’t mean that people are worse off inside Britain. Also the “wealth effect” attributed to stock market gains and losses is a somewhat bogus concept. When the market goes down the money is not destroyed- it just goes into a different bucket like cash or bonds. Money is destroyed when people default on loans.
This is basically a propaganda piece intending to scare people who might be inclined to disrupt the status quo. It uses two logical fallacies- the fallacy of authority (Credit Suisse) and the fallacy of consequences (loss of wealth).