U.K. Votes to Leave the European Union
David Cameron resigns as Prime Minister after U.K. votes to leave the European Union
Gordon Isfeld and The Associated Press | June 24, 2016
U.K. Prime Minister David Cameron said he will resign by the fall and insists the British people’s will must be respected after voters chose to leave the 28-nation European Union.
Cameron says there can be no doubt about the result of Thursday’s historic vote but that he is not the “captain” that will steer the ship through difficult negotiations with the EU.
Britain voted to leave the European Union after a bitterly divisive referendum campaign, according to tallies of official results Friday, sending global markets plunging, casting British politics into disarray and shattering the stability of a project in continental unity designed half a century ago to prevent World War III.
British stocks plunged as the market opens as investors scramble to react to the news. The pound has hit a 31-year low.
The decision launches a yearslong process to renegotiate trade, business and political links between the United Kingdom and what will become a 27-nation bloc, an unprecedented divorce that could take decades to complete.
“The dawn is breaking on an independent United Kingdom,” said Nigel Farage, leader of the U.K. Independence Party. “Let June 23 go down in our history as our independence day!”
Official results released early Friday show the “leave” side prevailed 52 percent to 48 percent in Thursday’s vote, which had a turnout of 72 percent
Earlier, only minutes after voting ended in the great British Brexit referendum Thursday, Farage had appeared to concede defeat.
He told a television reporter that the Remain campaign looked to have “edged it” over the Leave side. Two polls appeared to confirm his view, with one survey suggesting the Remain camp would win by 54 per cent.
The president of the European Parliament said he expects negotiations on Britain’s exit from the European Union to start quickly.
Martin Schulz told Germany’s ZDF television Friday he expects Cameron to invoke Article 50 of the EU treaty, which would set in motion the exit process.
Schulz said years of suspense would be “neither in the interests of Great Britain nor in the interests of Germany, France, Italy or the other member states of the EU.”
Thursday’s U.K. referendum on whether the country should stay or exit the European Union proved a political squeaker — as tight as it was been divisive.
The pound suffered one of its biggest one-day falls in history, plummeting more than 10 percent in six hours, from about $1.50 to below $1.35, on concerns that severing ties with the single market will hurt the U.K. economy and undermine London’s position as a global financial center.
Going into the referendum, pollsters and U.K. bookies had given the Remain side a slight lead over Leave supporters. Indeed, those wanting to stay in the EU had the edge early on — similar to many of the polls during the run-up to the ballot casting.
Tim Oliver, a fellow at the London School of Economics’ IDEAS foreign policy think-tank said the Remain campaign “failed to connect to ordinary people, seemed too much of an elite and London-based one.”
Oliver said the vote wasn’t just about Europe, but also about a popular British backlash against the capital and its elites. He said “the EU was one of the things kicked by this, but there were lots of other things such as a general anti-establishment feeling, anti-London feeling.”
As results poured in, a picture emerged of a sharply divided nation: Strong pro-EU votes in the economic and cultural powerhouse of London and semi-autonomous Scotland were countered by sweeping anti-Establishment sentiment for an exit across the rest of England, from southern seaside towns to rust-belt former industrial powerhouses in the north.
“A lot of people’s grievances are coming out and we have got to start listening to them,” said deputy Labour Party leader John McDonnell.
The issue has driven a deep wedge into the U.K., and thrown into question the future of the EU itself. If Britain — the group’s second-largest economy — does exit the 28-nation union, other members could follow.
“I think the issue is the uncertainty that it would generate,” said Charles St-Arnaud, a Canadian economist working at Nomura Securities in London.
Leaving the EU will be “a long process,” St-Arnaud added.
“They will have to renegotiate all the agreements between the U.K. and the EU, but with the U.K. outside of the EU,” he said.
“We have about two years where we won’t know the deal we’ll get. There would be some kind of free-trade agreement that will need to be negotiated between the U.K. and the rest of the EU … including adjustments to financial services, and those will take time.”
But a major concern is the fate of the U.K. economy itself: Can it survive a breakup with the EU, its largest trading partner?
Britain joined the EU in 1973, then known as the European Economic Community. The group now has 28 members — 18 of which use the euro currency, while the U.K. has continued with the pound.
The EU makes up the world’s largest economy, followed by the United States, China, Japan, Germany, Britain and France.
Canada, meanwhile, is the 11th biggest economy.
Ahead of Thursday’s referendum, Cameron had been warning voters a Leave win would result in an “irreversible” divide between Britain and the EU.
Cameron also warned that a break with the EU could push the U.K. into a recession — a conclusion also voiced by Bank of England governor Mark Carney, who previously headed the Bank of Canada.
St-Arnaud, at Nomura in London, agreed that splitting from the EU “could cause a small recession.”
“The view is that a Brexit will cause a big slowdown in the economy for a short time. The question is for how long?”
Prime Minister Justin Trudeau said he will be “watching attentively the outcome of that referendum, but it is up to the people of Great Britain to decide on their future.”
“I’ve made no bones about the fact that I always believe that we are stronger together, but I will allow — allow the people of Great Britain to make their own determination … obviously.”
The U.K. referendum puts the Comprehensive Economic and Trade Agreement between Canada and the EU in question, given Britain’s pivotal role in that trade pact, which has yet to come into force.
“We are of course working very, very hard on moving forward with CETA,” Trudeau told reporters this week in Ottawa.
“It’s a good deal for Europe. It’s a good deal for Canada,” he said. “We had to do significant work over the past months in order to continue to advance (the deal) because there were real concerns and blockages amongst many partners and of course Great Britain has always been a strong and positive voice around the European table in support of CETA.”
Financial Post
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