Against all the speculations in favor of Stay, the Britons on Thursday chose to break away form European Union with a majority electorate voting for ‘Leave’. In immediate aftermath of the referendum the world saw a massive turbulence in global markets with them opening lower by about 8 to 10%, while GBP took the biggest hit in three decades. On the market calculations, just after hours of the declaration of the result, the UK economy has lost over $350 billion, about a 500 times of the amount famously mentioned on the Leave Campaign bus. While the referendum is not binding in anyway, the speech of Cameron made it clear that the UK is going to invoke Article 50 to separate from the bloc. The actual separation will take much longer and probably by the end of the discussions & negotiations, when it will actually crystallize, all those reasons for which Brits opted out might not even be served. To maintain good trade relations with the EU, the UK will still need to keep an open policy toward immigration of the EU nationals – which had been a major consideration for the Leave Campaign. Nigel Farage has already called NHS pledge a mistake.
But a more threatening scenario that has hit the UK now, is reflected in the voting pattern of the referendum. While the hinterlands of the English nationalist population voted for the exit, the Scots, the Irish, and the citizens of much the globalized London overwhelmingly voted to stay. An ‘insiders and outsiders’ vote divide? Spanish claim of Gibraltar is also made vocal in aftermath of the results. So, is the Sun finally setting on the Empire? It is not very unlikely now that Scotland and Ireland will chose to opt out of the Kingdom and move closer to Europe. The adjective ‘Great’ might not stay with Britain for too long now. We are possibly looking at a future where only England will remain of what is today The United Kingdom.
Brexit could also be disastrous for European Union, not only in sense of economy, but even for its own existence. UK is not the first member which has shown the sentiments to leave the union and with the recent mess the union itself might start seeing such sentiments getting emboldened. The Brexit can trigger more such exits from the Union, ultimately taking Europe back to the age of infighting. If anything of that sort comes to pass, this sequence here from popular the British comedy series, Yes Minister, will certainly prove to be very prophetic.
“We had to break the whole thing up, so we had to get inside”
For the rest of the world, Putin must be laughing his heart out. United States of America will also not be too unhappy, as all the currency flowing away from uncertainties of Europe will find a safer haven in their markets. Dollar has already seen the bump. Oil, for once not being the cause of turmoil, might just halt at current rate slowing its upward trend which would be a welcome news for India. In the short term they all must brace and be prepared to take the hit while working out a closer tie with the EU which is not anymore routed through the headquarters in London.
For all the promises made by the Leave campaigners, the UK seems to be left with very little leverage in the larger picture of geopolitics and global economy. David Cameron with his resignation announcement is going to go down in history as the PM who gambled the country away in an attempt to impress his party members.