Out is out: What Brexit means for the UK and EU now
From the future of David Cameron’s prime ministership to the implications on the EU and the economy at large, here is a look at what happens now.world Updated: Jun 24, 2016 13:45 IST
With Britons voting to exit the European Union, the David Cameron government and the world at large now face a wide range of consequences. Here’s a look at what Brexit means for the United Kingdom.
1. The future of Prime Minister David Cameron and his government
As it became clear the people of Britain had voted to leave the EU, Cameron announced he will step down by October. The “Leave” vote meant he had lost much of his authority and would face a strong challenge from members of his Conservative Party who favoured an exit from the bloc.
Cameron, who was the most prominent face of the “Remain” camp, promised to try to “steady the ship” over the next few months but said a new leader should be installed by early October.
“I do not think it would be right for me to try to be the captain that steers our country to its next destination,” he said outside his official Downing Street residence in London.
2. The implications for the British economy
The pound fell to a three decade low as the BBC forecast that the UK had voted to leave the 28-member bloc. The pound, in fact, fell more than 10% against the dollar even before the polls closed, and this was in line with earlier forecasts – Goldman Sachs had predicted a fall of 11% while HSBC forecast that it could fall as much as 15%.
A weak currency is usually helpful for exporters but half of Britain’s exports go to the EU and little is sure about the trade arrangements that will be worked out with the bloc post-Brexit. The existing trade agreement between Britain and the EU is expected to end in two years, when the exit is formalised.
The exit is also expected to hit some 800 Indian firms that have invested in Britain and use it as a base to access the huge EU single market, and affect overall long-term investment plans in the UK.
Another problem is that Britain imports more from the EU than it exports, and its trade deficit with the bloc recently increased to £23.8 billion, the highest level recorded.
Cameron has said article 50 of the Lisbon treaty, which covers the two-year process for a member state to leave the EU, will come into play in the event of Brexit. In this case, Britain will be automatically ejected from the EU at the end of the two years, unless both sides agree to extend their negotiations.
3. Consequences for Great Britain
Nicola Sturgeon, the first minister for Scotland, was quick to point out as the results were coming in that Scotland had delivered a “strong, unequivocal vote to remain in the EU”. This spurred speculation that Scotland would again make a bid for independence. A 2014 referendum on the issue had ended with 55% of Scottish voters expressing their opposition to independence.
Sturgeon said the people of Scotland “see their future as part of the European Union”, and her predecessor, Alex Salmond, said the result of the EU vote could lead to a second independence referendum.
4. Implications for the EU
Experts appear divided on how the EU will react to Brexit – some believe the bloc will take steps for the exit of Britain, while others have said the EU could open some sort of negotiation with the UK aimed at saving the unity of the group.
But Jean-Claude Juncker, the president of the European Commission, has said a vote to leave the EU will be final while ruling out any renegotiations with Britain.
“The British policymakers and the British voters have to know that there will be no kind of renegotiation. We have concluded a deal with the prime minister,” he said, referring to an agreement worked out with Cameron in February on free movement of workers and benefits for immigrants.
“He got the maximum he could receive and we gave the maximum we could give so there will be no kind of renegotiation – not on the agreement we found in February nor as far as a treaty renegotiation is concerned. Out is out.”
First Published: Jun 24, 2016 11:15 IST