Brexit vote hits state budget, businesses
BOSTON >> Great Britain's vote to break free from the European Union sent ripples through the world's financial markets Friday, adding to the global concerns being watched by those with a stake in the Massachusetts economy, including state government leaders.
Overly optimistic estimates of investment-related capital gains taxes have been blamed for a shortfall in tax revenues to support $39.5 billion fiscal 2017 state budget bills, and legislative leaders are struggling to assemble a spending plan in the face of a July 1 deadline.
"I think the UK's withdrawal from the European Union is sending shockwaves throughout the Massachusetts economy in ways that we can't even begin to realize," Massachusetts Taxpayers Foundation President Eileen McAnneny told the News Service Friday afternoon. "There are profound impacts on the budget. The news is wreaking havoc on the global financial markets and that certainly impacts capital gains revenue and it will impact business profits."
Massachusetts Business Roundtable Chair Marcy Reed, president of National Grid Massachusetts, said Friday she'd been speaking during the day with roundtable business members who said they were seeing "early disruption" and anticipated needing to forge new relationships and trading partners and get "used to not relying so much on the UK and London specifically as that doorstep into Europe."
But local business officials are not panicked, Reed said. "I didn't hear any massive uproar over it. I think it's a wait-and-see thing," she said.
Reed said National Grid, which is headquartered in the United Kingdom, was positioned to deal with any short-term uncertainty and the vote has no effect on the company's operations in the United States. Its stock dropped seven percent Friday.
Carolyn Ryan, vice president of research and data analytics at the Greater Boston Chamber of Commerce, said the impacts of uncertainty, including over the future leadership in the U.S. and the U.K., are in play.
"There's obviously tremendous uncertainty about both the economic and political implications," Ryan said.
Impacts on U.S. exports bear watching, Ryan said, as well as London's role as a financial center.
TALK TO US
If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.