Brexit: 5 potential consequences if Britain votes to leave the European Union
If Britons vote on Thursday to leave the European Union, it would be a shock for the EU and the global economy and an earthquake for Britain.Britain EU Referendum Updated: Jun 21, 2016 16:37 IST
If Britons vote on Thursday to leave the European Union, it would be a shock for the EU and the global economy and an earthquake for Britain.
Some analysts warn of a potential “disintegration” of the EU as remaining countries seek to renegotiate their own relationships with Brussels.
“It would be a shock for the EU that would require mutual assurances that the EU continues to stick together and that a very successful decades-long process of integration doesn’t in the end turn into disintegration,” Germany’s Foreign Minister Frank-Walter Steinmeier said last week.
Here are some of the possible knock-on effects of a British departure from the European Union, or Brexit:
Prime Minister David Cameron, beaten in the referendum, quits as premier and Conservative Party leader.
Cameron put his authority on the line in calling the June 23 referendum and then leading the “Remain” campaign. The bookmakers’ favourite to replace him is former London mayor Boris Johnson, the “Leave” camp figurehead.
Conservative veteran Kenneth Clarke has said Cameron “wouldn’t last 30 seconds” if Britons vote to leave the EU.
On the back a likely majority of “Remain” votes in Scotland, Scottish First Minister Nicola Sturgeon launches a second referendum on independence.
This time Scotland votes to secede from the United Kingdom, fracturing the UK.
Northern Ireland would also be isolated from its EU land neighbour, the Republic of Ireland, and cross-border trade could plunge.
Former British prime ministers John Major and Tony Blair said it would be “difficult if not impossible” to maintain a free-travel area between the neighbours.
“Leave” campaigners have said the issue of possible Scottish independence has nothing to do with EU membership and existing bilateral agreements between Britain and Northern Ireland would continue to ensure cross-border exchanges with the Republic of Ireland.
Two years of complicated exit negotiations begin between London and Brussels, with access to the single market the main bone of contention.
European Commission chief Jean-Claude Juncker has already said Britain would be “a third party, who we won’t be bending over backwards for.”
WTO Director General Roberto Azevedo said the process could take up to 10 years, and that it “could take quite some time before the UK got back to a similar position that it has today,” given its weak negotiating position.
4. Recession risk
Turmoil in the markets and uncertainty in the City of London financial hub could lead to a 15-20% fall in the pound sterling, inflation at five percent, higher interest rates, a hike in the cost of labour, and the growth rate slowing by 1.0 to 1.5%, according to HSBC analysts.
Thousands of jobs in the City could be transferred to Frankfurt or Paris, top companies have warned.
The Brexit camp argues that the business world would adapt quickly with Britain remaining a flexible and dynamic economy, helped by new economic partners and selective immigration.
Although most economic institutions predict long-term pain for post-Brexit Britain, research consultancy Capital Economics said that it would “not spell disaster” indefinitely for the country’s valuable financial sector, highlighting Britain’s legal system, language, time-zone and large pool of skilled labour as “intrinsic advantages.”
Immigration from the EU drops drastically, leading to a shortage of workers in the construction and service industries.
Immigration consistently tops polls of the most important issues for British voters.
A win for Brexit in the referendum -- seen by many voters as a proxy poll on immigration -- would increase pressure on the government to impose tough caps on new arrivals.