Business

What Can Houston Expect From The ‘Brexit’?

Britain’s vote last week to leave the European Union has had an immediate impact on world markets. That includes Houston, a city with strong economic ties to the UK.

The United Kingdom ranked as Houston’s Number 10 trading partner last year.

More than 140 British companies have offices in Greater Houston, including major oil companies like BP and Shell, which have their North American headquarters here.

And trade between Houston and the UK added up to about $5.5 billion in 2015.

These numbers are all from the Greater Houston Partnership.

John Diamond, a public finance professor at Rice University’s Baker Institute, said for Houston, the biggest impact from the Brexit will come from the decline in exports and oil prices, but it will be limited.

“I would say overall, that the impacts on Houston and Texas will be relatively small,” he said. “Maybe larger than some places that aren’t centered around oil and trade, but overall relatively small.”

Diamond said the main issue – at least in the short term – is the lingering uncertainty now that Britons voted to leave the EU.

“There’s just no certainty in the current situation,” he said. “It makes it very hard for firms to determine how much to produce and where to produce goods.”

It’s that anxiety that has driven down the value of the pound and boosted the dollar. That’s what impacts both exports and the price of oil.

Patrick Jankowski, an economist and vice president of research at the Greater Houston Partnership, agrees with Diamond’s thoughts.

He also said there will be a long-term effect on some of the 64 Houston firms that have branches in the UK.

“It’s as simple as, if you have an office in London and you’re using your office in London to serve the continent, now you probably need an office in London and an office in Bonn or office in Paris or Berlin or somewhere,” Jankowski said.

The formal process of leaving the EU is expected to start once Prime Minister David Cameron steps down in October.

But the two economists said uncertainty will remain until the terms are worked out, and firms know what trade rules they’ll be dealing with.

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Florian Martin

Florian Martin

Business Reporter

Florian Martin is currently the News 88.7 business reporter. Florian’s stories can frequently be heard on other public radio stations throughout Texas and on NPR nationwide. Some of them have earned him awards from Texas AP Broadcasters and the Houston Press Club. Florian is a native of Germany. His studies...

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