Finally, The Europe Vote
By: Amit Bhushan Date: 26th June 2016 The readers of these articles in Management Paradise in a way always understood it for some time probably the first to predict that all is not well in Europe (Early 2012). The links to the articles with dates will help those who may not be committed followers of these articles with probability of having missed some earlier ones.Some of the links to articles which predicted global changes across macro-economic policies and possible political implications especially around weakness in European Union should help the readers refresh through these.
1. http://www.managementparadise.com/article/3933/reporting-of-crisis-europe-20122. http://www.managementparadise.com/article/4103/are-new-global-investment-intermediaries-required-to-overcome-current-economic-crisis3. http://www.managementparadise.com/article/3195/tackling-economic-paralysis-20124. http://www.managementparadise.com/article/4764/global-slowdown-2013-4-amp-india
With some of these forecasts coming out to be correct although with some divergence whereby the erstwhile weaker PIGS nations sticking within while UK making a faster exit. This is a major divergence from what was forecasted. Basically to subsume national identity to a supra-national identity requires justification beyond economics which would keep throwing different results basis situations which in any case are impacted by actions of other players in the environment.
European peace and stability did provide that template, however it was assumed that this should necessarily deliver economic prosperity, as result of integration. This allowed business to expand and compete allowing upper echelons to prosper, with increased clamour amongst the lower rungs for benefits. The external environment especially by China rose to meet the competition putting pressure to make labour markets more competitive including rising competition around services.
It is increasing disenchantment for the lower rung workers with little impact on his work profile and who saw his social protection benefits vanish but at the same time increased prosperity around higher echelons benefiting as a result of expansion in businesses.The vote which was largely unexpected would most likely trigger multiple changes in Europe around macro-policies and is also likely to have their repercussions elsewhere.
One change that is likely is that market would perceive a higher risk while allocating capital for Mergers & Acquisitions within large corporations in the developed world especially within Europe and this is likely to help in somewhat better allocation of capital towards greenfield and brownfield development projects.
Although for actual improvement in capital flow towards emerging markets, there would need to be a considerable improvement in policy making, regulatory regimes and sectoral stability/performance so that investors can be a bit more confident about growth/profits payouts.