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Brexit 101: Why this week’s vote is important for regular Americans – CNBC

Yeah, it does sound hyperbolic, but there are actually a couple arguments for why a British exit would hurt the rest of the globe.

In Europe, the EU could run into economic trouble for a couple of reasons. The lengthy and as-yet ambiguous exit negotiations could cripple investment, as mentioned above, but they could also lead to more exits. Nationalist groups across Europe will be watching the referendum closely to see if they can use the results into their advantage.

Elsewhere, the economic risks are best understood as a function of uncertainty. EU uncertainty: If financiers and companies are concerned that they may get cut out of free-trade channels, they may find safer (which is to say, less productive) uses for their money. And British uncertainty: All those billions of dollars already invested in the U.K. and invested abroad by British entities could be in limbo as London rushes to negotiate new non-EU trade deals with key partners.

In the U.S., billions, if not trillions, of dollars could be called into question by a British exit: In 2014, American direct investment into the EU totaled about 1.81 trillion euros, and about 1.99 trillion euros flowed in the opposite direction, according to the European Commission.

If even a small percentage of that is disrupted, it could reverberate across the globe.

Similar concerns apply for Chinese, Indian, Japanese and other international companies and investors.

Brexit 101: Why this week’s vote is important for regular Americans – CNBC

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