The shockwaves felt by the United Kingdom’s stunning decision to leave the European Union reverberated around the world late last week, eventually finding their way to Connecticut. Interestingly, few public officials here have come forward to comment extensively on one of the most important European policy decisions in decades.
It’s difficult to know precisely what Connecticut’s congressional delegation is thinking since House websites have been down for maintenance for the last several days. Perhaps they’ve been too busy helping to stage the much-publicized sit-in for gun control legislation to weigh in on this momentous move. Or perhaps they think we Nutmeggers are bored by foreign policy or that we’re preoccupied with the impending holiday commemorating our own independence to consider events across the pond. And as far as I can tell, neither of our senators has weighed in on this.
Stepping up to the plate to fill the void was U.S. Rep. Jim Himes. As was the case with the FBI’s attempt to force Apple to unlock San Bernardino terrorist Syed Farook’s iPhone, the Democratic congressman from the 4th District is willing to go where others in the state’s congressional delegation fear to tread.
In an interview with MSNBC the day after the vote, Himes said he was “very disappointed by the decision taken by a very slim majority of the British public.” He blamed it partly on older voters, whereas “the millennials, the people in London, understand what the markets are saying today that this is a very bad thing for the U.K.”
Himes knows something about international trade. Born in Peru, Himes speaks fluent Spanish and was a vice president at Goldman Sachs, working as a banker in Latin America and New York. He sits on the House Committee on Financial Services and the Permanent Select Committee on Intelligence.
Himes correctly theorized that Scotland, which narrowly voted not to secede from the U.K. in 2014, might now want to reconsider that vote in light of the fact that Scotland overwhelmingly voted to stay in the EU, while the country it wanted to secede from voted to do the opposite by four percentage points.
But perhaps more importantly was the effect Brexit had on the financial markets, which “have been devastated,” Himes said, as the British pound suffered its largest single-day loss in history.
“Markets speak,” said Himes, who was working at Goldman Sachs during the Asian financial crisis.
Himes then held forth on the right-wing isolationist in European politics that drove the Brexit, adding that “this is where that xenophobic angry right-wing dark instinct takes you.” He had harsh words for Nigel Farage, the leader of the pro-Brexit UK Independence Party, whom he accused of “completely reneging on the financial promises” his party had made.
I’m not sure I agree completely with Himes on right-wing politics being the only culprit here. To be sure, xenophobia, isolationism, and an anti-immigrant backlash were key factors. But if you believe former British Prime Minister Tony Blair, it was a “convergence of the far left and far right. The right attacks immigrants while the left rails at bankers.” Indeed, the Brexit opposition of left-wing Labor Party leader Jeremy Corbyn was lukewarm. That, in part, has led to a political crisis within his own party and to calls for his resignation.
Here at home, it remains to be seen whether Brexit will have an effect on Connecticut. Stamford is home to a number of branch offices of large European financial institutions such as the Royal Bank of Scotland and UBS, a global financial services company headquartered in Switzerland.
According to the Stamford Chamber of Commerce, “Stamford is the biggest international trade center between New York and Boston.”
UConn economist Fred Carstensen told Hearst that “there are [European] managers that may well decide that the U.S. is a better place from which to operate, at least in the short run.” But don’t get your hopes up that they will flock to Connecticut.
“Connecticut could capture some significant growth opportunities, if it were prepared,” Carstensen said. “But Connecticut is not well prepared. It is so consumed with the budget crisis that it is hard to find enough attention to make it more economically competitive.”
Thank you, Fred, for cutting through the fog once again. Failure begets failure. And until Connecticut’s leaders can find a way to make our state more competitive and attractive to new businesses, they will mostly stay away unless we bribe them with special deals. Perhaps Greenwich and other parts of Fairfield County want to exit the state. I know some hedge fund managers who would gladly vote for the Grexit.
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