LOS ANGELES (CNS) – The decision by voters in the United Kingdom to withdraw from the European Union could make Los Angeles-area exports to the country more expensive, but it is too early to know what the long-term effects will be on the local economy, a Los Angeles Area Chamber of Commerce official said today. Bilateral trade with the U.K. was nearly $7 billion last year, while trade with the European Union amounted to almost $30 billion, according to Carlos Valderrama, senior vice president for global initiatives at the chamber.
“Obviously, we do not know how the markets are going to react in the long run, but we hope in the near future, the markets will become more stable, and so, if that’s the case, then obviously we don’t see a major impact,” Valderrama said. “If the pound continues to devalue for the long, long run … our products are going to be more expensive.”
Uncertainty over the impact of the vote to leave the EU caused the British pound to drop today to a 30-year low against the dollar, dipping the pound’s worth to about $1.32. Valderrama said businesses in the Los Angeles area typically export civilian airplane parts and components, motor vehicles and computers to the U.K. Trade with European Union also involves aerospace parts and computers, as well as medical and laboratory equipment, he said. Due to the recent “big news” around the Brexit vote, the markets are understandably volatile, he said. Valderrama added that he believes “the financial structure in the U.K. is pretty solid,” and that the markets are reacting in a “pretty common” way. “Maybe in a week from now, or even a month from now, if the … pound has devalued so much and is not recuperating, maybe at that time we will be able to make a better judgment as to how this will impact our exports. But right now, with less than eight hours after the vote, it will be basically speculating.” Valderrama said he will be especially interested in knowing about the fallout for the European Union. The economic coalition is the Los Angeles region’s second-biggest trading partner behind the Pacific Rim, though it’s a distant second as the Asian and Pacific countries dominate trade through Los Angeles with about $250 billion in activity generated each year, he said.