In a decision that sent shockwaves across world markets, the United Kingdom chose to leave the European Union (EU) in a vote with lasting ramifications. As the world considers the results of the vote, it’s important to consider what will happen next.
The official results of the vote were announced on the morning of Friday, June 24. While it was a close race, British citizens ultimately voted to back the Brexit—the term commonly used to describe a British exit from the EU. Despite bad weather and floods leading to travel disruption, voter turnout was high—72.2 percent of eligible voters cast their ballot in Thursday’s referendum, which amounted to about 33.5 million votes. This fell just short of beating the record for highest voter turnout in a United Kingdom election, set at 72.3 percent in the 1992 general election.
Referendum results paint a picture of a strongly polarized country. The “remain” side won 48 percent of the vote, and the “leave” side won 52 percent. Areas that voted “remain” had stronger turnout than expected, and the same is true for the “leave” voters, according to results published by The Guardian. As expected, Scotland and London voted overwhelmingly for “remain.” But, outside the capital, every English region had a majority vote for “leave.” The morning after the vote, Prime Minister David Cameron announced he would resign by October. He also stressed that he will do everything he can to “steady the ship” over the next several months, but that new leadership was needed.
Cameron’s announcement helped momentarily calm turbulent markets and halt a rapidly plunging British pound. However, the change in leadership is not a cure-all, and the Bank of England (BoE) cautioned that there will be a period of uncertainty. The Bank’s governor, Mark Carney, was careful to stress that U.K. banks are more resilient since the 2008 financial crisis, and that the BoE will implement contingency plans. Carney also pledged to make 250 billion pounds available to banks to help steady volatile post-Brexit markets. As banks grapple with chaotic markets and a weak but recovering pound, uncertainty will be the norm for now.
What Happens Next?
A period of uncertainty is inevitable after such a historic, unprecedented vote. However, the United Kingdom will not leave the EU immediately; it could take as long as two years to negotiate the complex withdrawal process. During that time, the United Kingdom will slowly disentangle itself from the EU and renegotiate its economic agreements. Employment laws also remain uncertain, as the United Kingdom will now have to decide which laws from the EU to amend or discard.
Prime Minister Cameron is leaving it to his successor to instigate Article 50 of the Lisbon Treaty, the formal mechanism for leaving the EU. However, the rules in Article 50 are brief, and no country has ever used them before, so the process is not clear at the moment.
It is also unclear how this will affect the United States, but an immediate response has been a decrease of the Dow Jones and S&P 500 indexes, which has caused many Americans to lose value in their retirement accounts. If you own a business that sells products abroad, the strong U.S. dollar will make your products more expensive in the global marketplace, which could affect trade. As the process of the United Kingdom leaving the EU begins to unfold, more changes are sure to follow.
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