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Fallout from Brexit Vote: What we could see on Canadian Soil

July 12, 2016
3 mins
A man sits holding a tablet device

It was a referendum that shook the world’s largest economies – more than 50% of U.K. voters saying they want to see the country separate from the European Union. The June 23rd vote caused stock markets to swing as investors were consumed with uncertainty about the future. It also led to the pound dropping to levels not seen since the 1980s - the currency bottoming out a few weeks later on July 6th to just under $1.28 US – about $1.66 Canadian.

While the actual move to leave the EU will not take place for at least another two years – and only if the U.K. invokes Article 50 of the Treaty on European Union – it still has sparked major concerns among Canadians about the impact here at home.

The impact on the Canadian Dollar

A recent Reuters poll published in the Globe and Mail finds that the Canadian dollar will weaken over the coming months. This is not only a result of weak oil prices but also the Brexit vote strengthening the U.S. greenback. Since June 23rd, the loonie has almost fallen two full cents, and there are predictions it could drop further in the next three months.

Ahead of the Bank of Canada’s interest rate announcement on July 13th, economists are predicting that governor Stephen Poloz will leave the overnight rate untouched. Some say there could even be another rate cut in the near future. Brexit remains one of the biggest risks to our economy as it will continue to put downward pressure on markets throughout the lengthy exit process.

Canadian real estate market to feel effects of Brexit

Low Canadian interest rates have been attracting foreign buyers for a while now. A March report from Colliers International found that investment into our real estate market from other countries totalled $1.4-billion from August 2015 to February 2016 – that’s double the total from the same period a year earlier, and is one of the concerns among the Organization of Economic Cooperation and Development and the Bank of Canada.

If the Bank of Canada holds the overnight rate steady as expected or lowers it even further, this will only bring about more demand. That makes our inflation-protected real estate look like a great deal and safe offshore investment to anyone who previously may have wanted to invest in property in the U.K.

Travelling to the U.K. more affordable for Canadians

The drop in the British pound has Canadian travellers expressing their interest in visiting England. Since the referendum, one travel company has reported a 50% spike in searches for flights from Canada to the U.K. Experts are noticing a similar pattern in the U.S., China and the rest of the EU.

Still, this doesn’t mean travel the U.K. will be significantly cheaper for Canadians. Remember we’re still dealing with that lower loonie. CIBC senior economist Royce Mendes says he expects the third quarter to be the best bet for travel and after that our dollar will begin to depreciate against the pound. So if visiting the U.K. is something that’s in your plans sometime over the next year, there are some other ways to keep your costs down. Using a travel rewards credit card for your everyday purchases can help you save and enjoy that British vacation even more.

What happens next?

At this point, there is still a lot of speculation and no one is entirely sure of what will happen next. CTV political commentator Yves Guillaume A. Messy believes that Brexit will actually present Canadians with more opportunities – such as our big banks acting as safe havens – and that our economy is still safely going forward. Either way, the U.K. leaving the EU will be a long, drawn-out process and nations will have to wait to see how everything will unfold.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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