According to Reuters, the London Stock Exchange and German Stock Exchange were attempting to merge which would have created the largest stock exchange in Europe. Mergers of the companies would allow its largest companies greater access to capital, create efficiencies to lower costs and still make money. There could have many advantages and the two exchanges have been working to create a merger for this was their 5th try.

There is another bigger reason why the merger failed – Brexit. When the United Kingdom was in the EU, from an economic perspective the barriers between the countries fell allowing  goods and services could move anywhere in Europe. In the case of England or London which has a heavy concentration of financial services company, there is a special law which allows people and capital to move around Europe with very little barriers. The United Kingdom voted to come out of the European Union and one of the consequences is the barriers will rise. Of course it is the UK’s idea they will negotiate with individual countries to have similar agreements but that is years away. The EU has said, it is better to be in than out and there is a cost to being out.

The bigger concern is over the next few years supply chains for English speaking companies. For example, many American companies use England as their first stop and then use wholesalers and distributors to go throughout Europe. For over 40 years, this has been the normal and recommended method to do things, now something will change. In America, President Trump has talked about adding tariffs to come into the US and negotiate trade deals on a country to country basis. Something similar will happen in England.

Linking to dividend paying stocks, for countries to go individually or go in a group there are advantages and disadvantages to each method, but all countries can determine what is best for themselves. With the Brexit movement, you can see government actions have consequences. As a business, you can live with it or find alternatives, some will be less expensive.

There are more questions than answers, till the next time – to raising questions.