UK votes to leave the EU

The UK has voted by 52% to 48% to leave the EU in yesterday’s referendum.

Following the result, Prime Minister David Cameron, who had campaigned for Remain, has announced his resignation and that he would leave office in October. He made the announcement in a televised statement this morning saying, “The British people have made the very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction, I do not think it would be right for me to be the captain that steers our country to its next destination.”

There are also questions over the future of Jeremy Corbyn’s role as leader of the Labour Party as two Labour MP’s tabled a vote of no confidence in him this morning. 

Divided UK

The vote showed the divisions within the UK, with England and Wales voting predominantly for an exit, and Scotland and Northern Ireland voting to stay within the EU. Following this vote, Sinn Fein have said it strengthens the call for a united Ireland. On exit of the EU Northern Ireland faces having an international border with Southern Ireland. Scottish first minister Nicola Sturgeon has said it’s “democratically unacceptable” for Scotland to be removed from the EU against its will following the UK wide vote and that the Scottish government would begin preparing legislation for another referendum on its future independence from he UK. However, an independent Scotland would still have to comply with the EU’s criteria for membership and potentially face having an international border and currency differences with England, one of its greatest trading partners.

Finance reaction

Financial markets originally rose at 10pm yesterday at the end of the EU referendum initially leading to beliefs that the UK would vote to remain within the EU. However, as the result became clearer, the pound sunk as low a $1.35, and stock markets around the world reported their worst one day losses in years. Investors rushed into so-called haven assets, assets such as gold which are seen as relatively stable in tumultuous trading times, which have risen drastically in value. Global bonds have also been hit, and the Swiss franc, seen as a safe haven currency, has risen dramatically with the Swiss National Bank having to step in to cool rising values.

Financiers are predicting a fall in the value of the Euro and job losses in the already deflated European job market.

However, the Bank of England Governor Mark Carney and Prime Minister David Cameron have both said the British economy is in a fundamentally good place.

It’s feared increased pressure on European economies could lead to other nations already unhappy with the EU also calling for referendums on exiting the EU, creating further uncertainty and instability across the continent, with potential for global economic and political implications.

International reaction

French National Front leader Marine Le Pen and Dutch far right leader Geert Wilders have this morning increased their calls for a referendum in their countries.

Other European leaders acted with dismay with German foreign minster Frank-Walter Steinmer saying it was a sad day for Europe and Britain.

Uncertain future

It is uncertain how Britain will negotiate their exit deal at present. There are huge implications for trade once the UK leaves the EU with EU officials saying EU principle of free movement of goods, capital, services, and most importantly given the basis much of the exit campaign was fought on, people, must apply for a trade deal to be struck. This may mean calls for an Australian style points based immigration system within the UK can not be implemented, and the UK will still have to abide by free movement of people in the EU if we wish to trade freely within the EU. 

There is also a question mark over what rights the millions of British expatriates currently living in the EU with equal access to healthcare and other benefits will have on exit, and what will happen to the many non-British EU migrants living in the EU.