The Case for Muddling Through Brexit

SANTA BARBARA – Panic is gripping markets – stocks and bonds are falling, the pound is plumbing new depths, fears of recession are rampant – all because a slim majority of voters in the United Kingdom decided that the country should leave the European Union.

The British public has spoken and the die is cast. The UK’s new prime minister, Theresa May, will have to invoke Article 50 of the Treaty of Lisbon. Within two years, Britain will be officially out, like it or not.

But is all the market angst warranted? One could argue that the outlook is much less dire than most people realize. My advice is to take a deep breath and adopt the long view, because this story is far from over. After all is said and done, the ending could in fact turn out to be surprisingly benign and, ironically, similar to what exists now.

The challenges ahead are obvious. The narrow majority for “Leave” implies that there are still many in Britain who deeply resent the idea of “Brexit.”