United Kingdom Votes to Leave EU; Cameron to Resign as PM

Brexit text with British and Eu flags illustration

By Angus Gillespie

CBJ — In an historic referendum put forth by British Prime Minister David Cameron, the United Kingdom has voted 52% to 48% in favour of leaving the European Union after 43 years.

London and Scotland voted strongly to stay in the EU but much of the rest of Great Britain voted no. Voters in Wales and the English shires backed the Brexit in large numbers.

The pound sterling fell to its lowest level against the U.S. dollar since 1985 as the markets reacted swiftly and negatively to the results. The Bank of England may have to intervene to shore up the pound, which lost 3% within moments of the first result showing a strong result for “Leave”. It was down more than 6.5% against the Euro.

The decision will have widespread economic ramifications for the UK moving forward.  Those on the “Leave” side say the effects will be minimal and that it will restore the UK’s solid independence, while the “Remain” side is convinced it will result in far more serious consequences for decades to come.

Of concern to the European Union is that the UK will be the first in what could be a domino effect of other countries exiting. Greece, Portugal, Spain and Italy have made it clear they are not satisfied with the union, which includes more than 500 million people. Major political parties in France and the Netherlands have already indicated they too want to seek extradition from the EU.  Additionally, there are rumblings that Scotland and Northern Ireland will once again seek their own independence from the UK.  Less than two years ago Scotland largely voted to remain in the UK on concerns they would be left outside the EU if they took their own independence as a separate country. Now they feel they’ve been betrayed by the UK government.

Vacating the EU could cost Britain access to the EU’s trade barrier-free single market and mean it must seek new trade accords with countries around the world. U.S. President Barack Obama says it would be at the “back of a queue” for a U.S. pact. The UK is now truly an island on its own, in every sense of the word. It could take up to two years for the full removal process to be completed.

The EU, for its part, will emerge economically and politically weakened, facing the departure not only of its most free-market proponent but also a member country that wields a U.N. Security Council veto and runs a powerful army. In one go, the bloc will lose about one-sixth of its total economic output. If France was ultimately to follow the UK’s decision to exit, that would leave only Germany as a consistently strong economic powerhouse amidst a number of other countries whose economies have often been teetering on disaster.

World leaders including Obama, Chinese President Xi Jinping, German Chancellor Angela Merkel, NATO and Commonwealth governments had all urged a “Remain” vote, saying Great Britain would be stronger and more influential in the EU than outside.

The defeat is a crushing one for Cameron, who has announced he will be resigning, although he’ll remain in his position until October. Former London Mayor Boris Johnson, a staunch supporter of the “Leave” campaign, is already being touted as someone who will challenge for Cameron’s job. Ironically, Johnson’s own father, Stanley Johnson, was a “Remain” supporter.

Cameron is expected to formally report the result to his European counterparts within days and prepare negotiations for the first exit by a member state from the EU — an exit he has said would be irreversible.

@CanBizJournal

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