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Brexit Referendum Poses Challenges for Multinationals

Whether U.K. voters decide to leave the EU or stay, FX volatility is likely.

By Susan Kelly | Updated on June 14, 2016
Brexit signsIf British voters choose the “leave” option in next week’s referendum on the United Kingdom’s participation in the European Union, the so-called “Brexit” could pose challenges for multinationals that operate in the U.K.

If the U.K. opts to leave, the nation would enter a prolonged period of uncertainty as it negotiates agreements governing its trade with EU members. That uncertainty would discourage investment and hiring in the U.K., dampening economic growth and encouraging volatility in foreign exchange rates. A report last month from the U.K. Treasury said that leaving the EU would slow the U.K. economy “materially” and might even send it into a recession, and that unemployment would likely rise.

A Brexit would also be a blow to the European Union in that it could encourage groups in other member nations that are agitating to exit the EU.

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