UK’s former Prime Minister and leader of the Conservative Party, David Cameron, promised the country a referendum under his re-election in 2015, which since this morning has now too seen his resignation. The British exit from the European Union (EU) – or “Brexit” – saw Britain’s four united countries vote for whether they want to remain within, or leave the EU. With a 48.1% to 51.9% split – the latter in favour of Brexit – the UK has officially left the EU.
Founded in 1993, the EU was established as a trade haven for all countries within Europe. However, Britain has not only felt their hands increasingly tied by EU immigrant legislation, but has also voiced unease at the undergrowth of EU red tape which they feel are strangling UK’s economy.
Cameron’s “Remain” campaign won support in major city’s such as London, but predictions of the British midlands siding with former Mayor Boris Johnson’s “Leave” campaign proved to be true. Surprisingly, Wales garnered more Eurosceptic support than expected, while Northern Ireland and Scotland voted a majority to stay.
Statistics and voting polls aside, the obvious and somewhat nerve-wracking question that no-one can seem to properly answer is of course: what happens now? Analysts globally noted the volatile effects that Brexit has already had on global stock markets: the pound has slumped to a 30-year low, leaving one of the EU’s former economic powers poorer than France. Hitting closer to home, the dollar strengthened this morning, pushing the rand down by a definitively weakened eight percent.
Investor interest is another major factor to consider, and one which will take years to recover if dented. Whereby the UK was an easy route into the EU’s investment, foreign investors siphoned around 77 billion pounds out of the UK in the 6 months leading up to the referendum’s voting, over concerns regarding UK’s economic stability should Brexit prevail. This compares to last year’s 2 billion pound loss in the run-up to October. The loss of major European companies, as well as its effects on inflation and interest rates around import-export markets, could very possible mean the UK is unable to sign as favourable trading relationships outside of the EU as it did when it was part of the bloc’s “single market.”
HOW BREXIT AFFECTS AFRICA
For Africa, all UK-African trade deals – of which the EU had sole jurisdiction over – would become void, and would require an entire re-negotiation of both direct and indirect investments, trade, and even development aid agreements. South Africa is also the most vulnerable African country, as many of its companies are dual-listed on the London Stock Exchange and the rand is also far more liquid than other currencies, and therefore more vulnerable to immediate capital-loss. Essentially, this means South Africa’s economic junk-status may hit sooner than expected.
In terms of immigration, Brexit does allow the UK to clamp down on its own policies regarding who they allow into the country, but analysts have asked what will happen to EU citizens currently in the UK, as well as to the UK citizens in other EU member states. Parties such as the UK Independence Party (UKIP) are committed to preventing refugees flooding their borders, but the measures they take could make travelling to the UK even more difficult. South Africans: if you thought visas were an issue before, this is a whole new game.
THE SCOTTISH QUESTION
More significantly, however, Scottish National Party leader Nicola Sturgeon plans for Scotland’s likely call to revisit its referendum out of the UK in order to rejoin the EU, as its economy is incredibly dependent on their European membership. Further concerns are surfacing following the Netherlands, France, and Austria all rallying their own exits, which raises the question of how much slack Germany’s economy will need to pick up should they lose the EU’s funding-giants. If Germany’s Angela Merkel realises the burden, and decides to call for a “Gexit,” this could signal the beginning of the EU’s unravelling, and the potential collapse of countries like Greece and Spain, or even major currencies and global stocks.
However, for the moment, all eyes are turned to Britain and the EU, and are eagerly awaiting outcomes from next Monday’s meeting. As analysts worldwide have stated, the UK could be in for a few years of dramatic economic slump before they see any of Johnson’s predicted benefits materialise. Also, US President Barack Obama – who, by the way, was “pro-Remain” – mentioned that the US is still busy settling EU trade negotiations, and so the UK will have to wait at the back of the queue.
The discussions over the next few weeks carry significant weight for what the future of global politics and economics holds, and what the best way forward is going to be. Depending on how other European countries respond to Brexit, we may very well be born witness to the undoing of one of the world’s most powerful unions.
Photo sourced from Aljazeera