1. Business

Here's how Brexit will affect Florida and the Tampa Bay area

Clearwater Beach lifeguard Donovan Burns, left, scans the Gulf with his binoculars in this 2012 file photo, saying, "I've noticed a lot of British vistors." Britain's pullout from the European Union is expected to make it more expensive for British visitors coming to Florida.
[SCOTT KEELER | Tampa Bay Times]

Clearwater Beach lifeguard Donovan Burns, left, scans the Gulf with his binoculars in this 2012 file photo, saying, "I've noticed a lot of British vistors." Britain's pullout from the European Union is expected to make it more expensive for British visitors coming to Florida. [SCOTT KEELER | Tampa Bay Times]
Published Jun. 24, 2016

The ripple effects of Britain's surprise decision to pull out of the European Union could soon be felt on Florida's shores.

From trade to travel, tourism to real estate, the ties between Florida and what's been the fifth-largest economy in the world run deep. Friday morning's wake-up call — which came in the form of a severe jolt to the stock market — has Floridians bracing for what comes next, both good and bad:

• The expected drop in the value of the British pound will make travel to Florida more expensive, while making it a better deal for Floridians who travel abroad.

• Any downturn in British investment in Florida real estate may be mitigated because the market has gotten stronger.

• Florida's trade may see a net positive, thanks to cheaper imports. But exporters could be hit hard.

• A strong dollar makes U.S. products more expensive for other countries, which encourages them to switch suppliers. It also means that the value of overseas sales is reduced when it's converted back into dollars. That creates a challenge for companies like computer products distributor Tech Data, the largest public company based in Tampa Bay. More than half of Tech Data's sales come from its European unit.

Grant Petersen is among those in the Tampa Bay business community lamenting the British exit from the European Union (a.k.a. Brexit).

"Our members are disappointed," said Petersen, a Tampa attorney and chairman of the British-American Business Council of Tampa Bay. "A lot of our member companies have set up shop in the U.K. for the purpose of those operations serving as a gateway to the European Union and now, obviously, that is going to be in jeopardy."

Petersen, a labor and employment lawyer at the firm Ogletree Deakins, echoed a common worry among Tampa Bay industries and businesses: what's most disconcerting is uncertainty.

Will other European countries like France and the Netherlands follow the British lead and break from the union? Will the British pound suffer dramatically, triggering a recession? And if so, would that recession turn a slowdown in many economies into something much worse?

The shock that drove the British pound to a 31-year low Friday was so severe that Britain, at least momentarily, was supplanted by France as the fifth-largest economy in the world.

Wachovia Securities global economist Jay Bryson said he's not forecasting a global recession "at this point" based on Brexit alone.

But in a report Friday he cited the prospect of slowing activity in many economies and said an eventual unraveling of the EU "cannot be completely discounted."

Overall, he said, festering uncertainty could lead to weaker investment spending, which hurts the economy.

However, Jerry Parrish, chief economist for the Florida Chamber Foundation, cited some positives from the pullout.

"There is good news for Florida's imports," Parrish said in a report Friday. "Imports from the U.K. should now become cheaper. Currently, Florida imports twice as much as it exports to the U.K."

The value of the Euro compared to the U.S. dollar is likely to fall as well, he said, noting that Florida's imports from Europe made up 23 percent of the total imports in 2015, or a total of $16.9 billion.

Sam Mandelbaum, an international business lawyer based in Tampa, cited another positive. In dealing directly with British companies "it may make things a little easier (because) we won't have to deal with European Union regulations… It may simplify things."

The broader impact of the decision will take months to reveal itself. British Prime Minister David Cameron, who had led the campaign to keep Britain in the European Union, announced he will resign by October.

With a two-year timetable for the British to sever ties with the EU, the full scope of the economic impact is largely unknown.

Read more: Britain votes to leave EU; prime minister David Cameron to resign

But markets in the U.S. felt the pain from Britain's decision immediately. The Dow Jones Industrial Average plummeted more than 600 points (more than 3 percent), while Nasdaq sunk 4 percent. Local stocks from Tech Data to Jabil to Raymond James Financial were hit hard.

"The public is probably as shocked as the financial markets. I don't think many expected it to go this way," said Steve Athanassie, a financial adviser with ProVise Management Group in Clearwater.

In the longer term, Athanassie said, the news puts the U.S. in a stronger position, strengthening the dollar and pushing off the likelihood of any interest rate increases coming from the Federal Reserve.

"Treasury bonds are jumping this morning," Athanassie said. "Even with all the problems we have… the U.S. is still the safest place in the world."

Here's a closer look at some key areas linking Florida and Britain:

Real Estate

Although the British are second only to Canadians among foreign buyers in Tampa Bay, Realtors dealing with British clients don't expect the Brexit vote to have a dramatic impact on the area's real estate market.

That's in large part because the market has gotten much stronger.

Alex Jansen of Coastal Properties Group International, affiliated with the British art business Christie's, said the drop in the pound's value might cause fewer Brits to buy here and more Brits to sell homes they already own if they need to pull out their cash.

"But that is a good thing for us because the inventory is so low,'' Jansen said, referring to the supply of bay area homes currently for sale. "Losing that (British buyer) is not going to impact us one bit because we've got so many other ready, willing and able buyers. Right now we have four buyers for every house on the market.''

In addition, any homes put up for sale by British owners would help ease what Jansen calls today's "lean'' inventory.

Patrician Tan, a British-born agent with Coldwell Banker, said the Brexit vote "could have been a lot worse'' in terms of the pound's drop and likely impact on real estate in the Tampa Bay and Sarasota areas.

"For the last 18 months or so I've been a little bit concerned because as the dollar started to strengthen I started thinking the demand (by British buyers) is going to go down,'' said Tan, who attends real estate seminars and trade shows in Britain three time a year. "But though the dollar is very strong my British business has actually grown.''

One reason, Tan said, is that the British pension system allows people to take a lump sum when they retire. "So they have that money, and they are still buying properties, though maybe smaller properties,'' she said.

Last year, 19 percent of all foreign buyers in the Tampa Bay area were British, according to a study by the National Association of Realtors. British buyers in Florida spend a median of $289,600 — less than most other nationalities — and prefer single family homes.

"They don't get hung up on a particular location,'' Tan said, '' as long as it's in a reasonable drive of the beach.''


National tourism leaders were downplaying an immediate impact.

"We aren't anticipating any changes for tourism. There should be no impact on their interest or ability to come to the U.S," said Patricia Rojas-Ungar, U.S. Travel Association's vice president for government affairs. "I think if it would have changed their visa situation, then maybe we would have had more concern. There are no changes in UK visitors' ability to travel. We can just hope for the strong economy and for our special relationship to continue."

The United Kingdom is the second largest international tourist market for the state of Florida, with 1.6 million visitors in 2015. Out of the 21 million visitors who come to Hillsborough County every year, 500,000 come from foreign countries. Around 17 percent of those are from the United Kingdom, according to data from Visit Tampa Bay, Hillsborough's tourism agency, making it the second largest international travel market behind Canada and ahead of Germany.

"The United Kingdom has long been one of Tampa Bay's most important sources of international visitation. It will be two years at least before the U.K. leaves Europe, which provides plenty of time for any document or passport changes to take place," said Sanitago Corrada, CEO and president of Visit Tampa Bay. "In the interim, this summer's trips are already booked and paid for, and we expect that — after the financial markets adjust to the change — U.K. travelers will continue to find a fun, affordable destination here in Tampa Bay and the Gulf coast of Florida."

The U.K. is the largest international tourism market for Pinellas County, said David Downing, the executive director of Visit St. Pete-Clearwater.

"There's a short term and long term concern for us and we are watching it carefully," Downing said. A lot of it will depend on how the pound recovers and stabilizes and how travelers will respond to travel they've booked to the U.S. already.

"What we have going for us is that we have a long history with the U.K., and unlike in America, holidays are a birthright in Europe," Downing said. "People still go on vacation. They may economize it some to fit into their budget, but they still go. We have strong repeat visitation from the U.K., which means visitors come back again and again."

It's unclear what kind of effect the Brexit vote will have on American travel to Britain. Airline prices have not yet fluctuated, and even with the pound's dip in value, it is still stronger than the U.S. dollar.

But more Americans might find it cheaper to travel to Great Britain this year depending how the markets recover, said Britt Beemer, chairman of American's Research Group, a consumer research organization.


It's too early to tell how the Brexit vote will affect shopping patterns this year, but Beemer said it will likely have some effect on consumer confidence leading up to the holiday shopping season.

"This is affecting the financial markets all over the world," Beemer said. "But the withdrawal is a two-year process. A lot can happen between then and now. Everything depends on how much Wall Street recovers."

Times Staff Writers Justine Griffin and Susan Taylor Martin contributed to this report.