Brexit: What Happens Next?

Yesterday, the United Kingdom voted by a margin of 52% to 48% to leave the European Union (EU), ending a four-decade long membership with the EU. Immediately, global financial markets reacted negatively to the news of Britain’s decision. In the 24 hours following the result being announced, the pound lost value against every currency worldwide, including losing nearly 10% of its value against the Euro, a record loss for a single day of trade. The decision also quickly had political ramifications for both of Britain’s main political parties. Prime Minister David Cameron announced he would resign by October as a result of the decision. Meanwhile, the opposition Labour party leader Jeremy Corbyn faces a no confidence motion following criticism for a lacklustre effort to campaign for the Remain vote.

Though the referendum result supported Leave, that is only the first step in a years-long process of EU withdrawl. In order for any process to begin, British parliament must first invoke Article 50 of the Treaty of European Union, formally notifying the EU of its intention of withdrawing from the European Union. Once this article is invoked, a two-year negotiation process between Britain and the EU begins. At the end of the two years, Britain leaves the EU with newly negotiated trade conditions offered to it. If Britain finds these unacceptable, it may extend the negotiating period if a majority of EU nations is willing to extend negotiations. If not, Britain could potentially leave the EU with unfavourable trade conditions. During the two years, EU regulations still apply to Britain, however Britain will have no say in European parliament.

The referendum results highlight a deeply divided UK. The Leave vote came primarily from regional areas and small towns, particularly within England and Wales. Large metropolitan areas, meanwhile, had the majority of the Remain vote. The Leave vote was the majority overall in England and Wales, while Northern Ireland and Scotland had a majority Remain vote. In addition, there was also a marked generational divide on the referendum vote. On the one hand, three-quarters of adults aged between 18 and 25 voted Remain. Conversely, a majority of voters over the age of 50 voted to Leave the EU. There is also a further divide between the level of education attained and voting preference. Analysis has shown those with a college education were more likely to vote Remain, compared to those who did not have a college education, who leaned towards Leave.

As well as leaving the European Union, Brexit may yet also result in the break-up of the United Kingdom as a whole. Immediately following the decision, Scotland’s First Minister Nicola Sturgeon argued that the decision to leave the EU was against the will of the Scottish people and that a new referendum on Scottish independence is necessary. Northern Ireland, which also voted in a majority for Remain, may also call for reunification with the Republic of Ireland, a EU member state. Sinn Fein, the oldest political party in Ireland, has called for a referendum on the issue along similar lines to those argued by Nicola Sturgeon of Scotland’s Scottish National Party.

These figures reflect a more widespread trend throughout Western nations. In the West, the divide between metropolitan and rural, tertiary educated and non-tertiary educated and generations has become more and more pronounced in recent years. This has manifested itself in a variety of ways, from widespread Euroskepticism and resurgent populism throughout Europe to the rise of political figures such as Nigel Farage and Jeremy Corbyn in the UK and Donald Trump and Bernie Sanders in the United States. Britain’s decision to leave the European Union is the latest example of a more widespread discontent with the current state of politics and highlights the fragmentation and slow disintegration of the EU in general.

From an Australian perspective, Brexit will result in a short-term impact on global financial markets, including our own. Looking further into the future, its impact is more uncertain. In a previous piece I wrote on the topic, I highlighted how Brexit may affect our relations with Britain as well as the European Union. Now that Brexit has been realised, and more so in light of the resignation of David Cameron, the notion of a free-trade and movement zone within the Anglosphere is worth re-examining. Leave campaigners, particularly Boris Johnson, who could succeed David Cameron as the next Prime Minister, have argued for renewed ties with ‘Anglosphere’ nations such as Australia, New Zealand, the United States and Canada. There is a potential for an Anglosphere free-trade zone to occur, similar to the Eurozone, especially if Britain views the leave agreement offered by the EU to be unsatisfactory.

Already in the days and hours since Brexit, there has been considerable political and economic ramifications for Britain. Though things will inevitably settle considerably within days and weeks, the longer-term future carries considerable uncertainty for Britain and the European Union. It is difficult to determine at this early stage whether the decision will be a net benefit or hindrance for Britain in the long run, though it will almost certainly not be the ruinous event for Britain that some columnists have argued it will be.