Driven largely by voters in England, the United Kingdom has voted to leave the European Union, to make their ‘Brexit’. This won’t happen overnight, the process is likely going to be long and painful.
The Brexit Result
The vote was so very close, 51.9% to leave vs 48.1% to stay. The largest turnout of voters, 72%, in the last 25 years took part. Scotland and Northern Ireland voted solidly to remain. The vote appears to highlight divisions within the Kingdom. The coming changes may end up being more than just the UK’s departure from the European Union.
The Immediate Reaction to Brexit
The first immediate change is going to be the British Prime Minister. David Cameron has tendered his resignation to take effect in October. That will not trigger a general election as the next Conservative leader will become Prime Minister.
Anti-EU groups in countries throughout the EU are expected to push harder for referendums for their own countries. They view a break from the EU as being able to take control of their own destiny. Being able to run their own affairs, not being controlled from Brussels.
Scotland’s First Minister (like a PM) responded to 62% of Scotland voting to remain in the EU as a substantial change of circumstances for Scotland’s relationship with the United Kingdom. She’s moving to initiate another referendum to determine if Scotland will remain within the UK. She is pushing for Scotland to remain part of the EU.
The leaders of the EU are saying the UK needs to move immediately to invoke Section 50 to trigger the exit from the EU. That would force current PM David Cameron to start the process rather than leaving it for his successor who would likely have more stomach for it.
Stock markets around the world are reacting negatively. Anything upsetting the status quo usually does. Oil and the Canadian dollar are both down this morning. Some of the reaction will be a correction as traders were anticipating the UK would remain in the EU and be trading accordingly.
Charting New Territory
Disentangling the UK from the EU is not going to be a streamlined process. The process isn’t clearly laid out. The repercussions may be decades before they are fully felt.
There are an estimated 80,000 pages of laws the UK follows which were passed by the EU. They need to be reviewed to determine what becomes a sovereign choice of the UK and what goes.
The remaining EU members will need to determine on what basis their future trading will continue. The UK has been a major economic contributor to the EU. It’s not like any of the remaining 27 members can just cut the UK off. They will be seeking to make sure there are benefits to EU membership that the UK will no longer receive. At the same time, they will be seeking their own economic gain.
Is Brexit Part of Bigger Issue(s)?
There appears to be a growing movement around the world of distrust and anger towards the ruling classes. The EU is seen by many to be a ruling class from afar, a distant government which impacts the lives of the common people with no say by the common people.
The sense of wanting some control over governance is strong and growing as economies around the world show sluggish or no growth. The common people bear the brunt of the sluggishness in stagnant wages and high unemployment. They watch the corporations who control the sluggishness report ever-increasing profits.
Those profits move the world’s money supply into the control of an elite group while everyone else struggles to stay afloat. Those corporations are allowed to have an influence on how the trade agreements are reached and implemented. Then they use them to increase their bottom line while the rest of the population stagnates.
The Brexit vote is a blow against governments who fail to find the balance between the need for business to succeed and contribute to economic prosperity and the need for its citizens to broadly prosper with them. When only a small portion of the population sees their lives improve, the rest gets angry.
For the average Briton, the EU is a trade agreement with a government attached. It doesn’t carry the same attachment as being part of their own country, nor can they influence what it does. Their own government is far from perfect, but at least they can vote it out.