What's Going On WIth The Brexit
Update (6/24): The BBC has called the referendum for "Leave," a shocking result and a huge blow to the EU.
Prime Minister David Cameron has announced he will resign:
[Cameron's] decision to attempt to solve party infighting and see off the threat of the United Kingdom Independence Party by offering a referendum on membership of the EU if he won the general election has proved fatal to his reign… [Said Cameron] "the British people have made a very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction."
[CNN]
Markets have been tumbling on the news that Britain is set to exit the EU:
By 4 a.m. in London, as a vote for Leave looked increasingly likely, markets were in free fall. The pound fell more than 10% against the dollar from just before the polls closed, to below $1.35, below its financial-crisis-era lows. In the U.S., Dow Jones Industrial Average futures traded off more than 500 points. In the U.K., futures on the FTSE index collapsed 7.4%. In Asia, Japan's Nikkei was down about 6%.
The New York Times has a great roundup of the repercussions on the financial markets, including the instant plunge of the pound and the Euro:
How exactly did this happen? The Financial Times points to a divided nation, one where the old voted on a future the young did not want:
The official Vote Leave campaign set out to exploit this "them and us" feeling in an email to supporters on Thursday, urging those in the "heartlands" not to let those living in "LONDON and SCOTLAND" make the decision for them. To illustrate the point, voters lining up at a polling station in a "leafy London suburb" were pictured in the email as if to frighten those living in less prosperous areas outside the capital into voting.
And yeah, Britain really done goofed on this one. Fusion's Felix Salmon explains is no uncertain terms:
This vote is also the grimmest of reminders of the power still held by the older generation, not only in the UK but around the world. Young Britons—the multicultural generation which grew up in and of Europe, the people who have only ever known European passports—voted overwhelmingly to remain. They're the generation that just lost its future. Meanwhile, Britons over the age of 65, fed a diet of lies by a sensationalist UK press, voted by a large margin to leave. Most of them did so out of a misplaced belief that doing so might reduce immigration, or make them better off, or save them from meddling bureaucrats. In a couple of decades, most of those voters will be dead. But the consequences of their actions will resonate far beyond the grave.
[Fusion]
And thus starts a lengthy two-year breakup process, where EU and British officials will hash out how, exactly the two economies will interact with each other. Bloomberg has an outline of the three main possibilities.
The Norwegian Model
By staying in the looser European Economic Area, the U.K. would still have access to the EU's single market and participate in free movement of workers — but without any say in how they evolve — and it would still contribute to the EU budget. Banks prefer this model because it would preserve their access to EU customers.New Deal
Negotiating its own free-trade agreement would limit most trade tariffs between the U.K. and the 27-nation bloc but it would take years to work out the extent of Britain's market access. The EU's trade agreement with Canada took seven years to negotiate and still isn't ratified.WTO Rules
Trading with the EU under World Trade Organization rules would avoid the hassle of setting up a complex new agreement and the U.K. could set its own trade tariffs just like Russia and Brazil do. But it would have no favorable relationship with the EU or any other country.
In the meantime, UK nations Scotland and Northern Ireland, who voted overwhelmingly to remain the EU, are spinning up independence talks of their own. Scotland first minister Nicola Sturgeon says that a second Scottish referendum is "very likely."
Nicola Sturgeon said it was "democratically unacceptable" that Scotland faced the prospect of being taken out of the EU against its will….
At a news conference in Edinburgh, Ms Sturgeon said the SNP manifesto for May's Holyrood elections said the Scottish Parliament "should have the right to hold another referendum if there is a significant and material change in the circumstances that prevailed in 2014, such as Scotland being taken out of the EU against our will".
[BBC]
Northern Ireland authorities are now considering a vote for a united Ireland.
"This outcome tonight dramatically changes the political landscape here in the north of Ireland and we will be intensifying our case for the calling of a border poll" on a united Ireland, Sinn Fein chairman Declan Kearney said in a statement.
"The British government as a direct result have forfeited any mandate to represent the interests of people here in the north of Ireland in circumstances where the north is dragged out of Europe as a result of a vote to leave," he said.
—
Previously (6/23): Today, Britain votes on whether it will remain part of the European Union — of which it has been a member since 19731 — or leave it, aka the "Brexit" (thats, uh, "Britain" + "Exit"). The results of the in/out referendum will have major consequences for Britain and the EU — here's what's going on, and what the different results might mean.
What Happens Next If Britain Votes To Leave?
In accordance with the EU's Article 50, which outlines how a nation leaves the EU:
The form of any withdrawal agreement would depend on the negotiations and there is therefore no guarantee the UK would find the terms acceptable… During the two-year negotiation period, EU laws would still apply to the UK. The UK would continue to participate in other EU business as normal, but it would not participate in internal EU discussions or decisions on its own withdrawal.
Politico also has a good rundown of the various scenarios that could play out if Britain votes to leave.
What Leaving Would Mean For Britain
Britain's GDP would likely take a hit:
While EU immigration would be reduced, Britain would still have high net migration:
Would the reductions Brexit might bring be enough to enable the government to hit the "tens of thousands" net migration target? Not necessarily –the most recent data showed net migration of non-EU citizens at 196,000. At least under current economic conditions and policies, Brexit alone would not sufficient to bring the target within reach.
Prime Minister David Cameron would probably struggle to survive:
It only takes 50 Conservative MPs to trigger a vote of no confidence, which, if we leave, Cameron would struggle to win. So in the event of Brexit, it becomes a question of whether he jumps, or whether he is pushed. However, in that situation, it seems likely that even [Conservative leaders] would recognise that the Prime Minister (and probably the Chancellor) being forced to immediately resign would only increase global stock market uncertainty, posing a big risk to the UK economy. So it may be that they are willing to keep their Eurosceptic troops at bay, and let Cameron stay on — but for only so long.
And it could also increase tensions between the pro-Europe and anti-Europe countries in the UK:
We are particularly concerned about political uncertainty in the UK, including a possible disintegration of the UK into its more pro-European (Scotland, Wales, and Northern Ireland) and less pro-European parts.
[VOX EU]
What It Would Mean For The EU
Most prominently, a Brexit might prod other EU members with similar anti-EU sentiments to leave the EU themselves:
Denmark, the Czech Republic and Poland could face their own referendums on EU membership if the U.K. votes to leave, experts believe. "The main concern is that an unexpected exit of the U.K. from the EU could lead to similar initiatives in other member states, making Brexit the first step towards the disintegration of the union," Antonio Barroso, senior vice-president of political risk consultancy, Teneo Intelligence, said in a report this week.
[CNBC]
And For The Rest Of The World
Primarily, a Brexit would send shockwaves through the financial world. As an illustration, news on Monday that the "Remain" was edging ahead of "Leave" in polls sent markets rallying:
Global equities had the biggest rally in three months, the pound strengthened the most since 2008 and Treasuries fell on signs the campaign for the U.K to stay in the European Union was gaining momentum before this week's referendum.
"This rally has just underlined how very nervous markets are," said Morten Helt, an analyst at Danske Bank. "You could easily imagine a poll tomorrow showing a majority for the Leave camp, with another volatile reaction in the opposite direction."
But it could have geopolitical consequences as well, potentially destabilizing a critical region in the future:
Ever since World War II, the United States has been deeply invested in safeguarding long-term peace and prosperity in Europe. We still have thousands of troops stationed in Germany to help maintain the status quo there, and we've worked to build a system of alliances that helps to minimize the possibility of conflict. A British decision to leave the EU isn't going to pose an immediate threat to this political order. But it could signal growing dissatisfaction with the status quo among European voters. That could have unpredictable results.
[Vox]
And, horror of horrors, it might affect "Game of Thrones":
The European Union helps fund production of HBO's epic in Northern Ireland. If the U.K. leaves, that money could too… "It might be up in the air for U.S. studios who want to film in the U.K… There are EU programs to help fund all of this. If the U.K. is no longer part of the EU, that has the potential to go away."
The Arguments On Each Side
Leaving The EU
TL;DR, pro-Brexit advocates are unhappy with the EU's power over the British economy:
Brexit backers… say the E.U. creates burdensome regulations that have hurt British innovation and competitiveness.
The anti-EU camp argues that leaving the EU will be good, as it gives Britain freedom to determine its own fate: to decide about taxes, fishing, immigration, and other issues which are of the utmost importance for the economic and political well-being of the British people.
But the single most important issue for voters is probably immigration:
If Britain leaves the European Union, it's likely to be because of immigration. The issue is more important than the economy for most voters in Thursday's referendum, polling firm Ipsos Mori says. And more than 50% of voters who plan to back a British exit (Brexit) from the EU cite migration as the main reason.
Many in the pro-Brexit camp have employed some increasingly xenophobic anti-immigrant arguments, as John Oliver pointed out:
With its anti-EU regulation and anti-immigration message, the pro-Brexit camp has proven attractive to the working class:
The debate has also cut along the country's famously deep class divides: Voters with less money and education are more likely to support leaving the union. Robert Tombs, a historian at the University of Cambridge, said this stems from a sense of abandonment among poor and working-class Britons. The Brexit debate has become a vessel for anti-establishment and anti-elite feelings directed at the leaders of mainstream British political parties as much as at Europe.
The Guardian has a good, long piece on how the Brexit went from fringe idea a few decades back to mainstream today:
The leave campaign has focused to a depressing extent upon immigration. But the case for departure has deeper intellectual roots that cannot be dismissed as mere nostalgia, xenophobia or reactionary reflex. The idea of Brexit has become part of the warp and weft of contemporary politics. The question, surprisingly unexplored, is: how?
Remaining In The EU
TL;DR, the Brexit would be disastrous for Britain's economy:
Rarely has there been such a consensus among economists, as there is on the damage that Brexit would wreak on the British economy. The warning may turn out to be wrong — but it is difficult to ignore.
Which is all they can really argue, since actually defending the EU is a tough sell these days:
[I]t is telling that those who want to stay, including Prime Minister David Cameron and the leadership of Britain's two main political parties, have not expressed much enthusiasm for the European Union itself. Instead, their arguments are focused narrowly on British self-interest. Their message is not that membership in the bloc is an exciting opportunity so much as a basic economic necessity.
TL;DR, Would Rather Watch
Here's a "cheeky little overview" of what's going on.
