Welcome to the world after Brexit: Here's what happens next
A majority of British voters said Thursday that the United Kingdom should leave the European Union. Global markets are moving wildly, and currencies are making big moves, but the actually political process will be much, much slower.
First — technically speaking — the referendum is not legally binding. In theory, British Prime Minister David Cameron could ignore the will of a slight majority of voters, and not make any moves to exit the political and economic bloc.
But that is highly unlikely. Assuming Cameron respects the democratic process, he will invoke Article 50 of the Lisbon Treaty, which begins the formal, legal process for leaving the EU.
That would then begin a series of negotiations for how to disentangle the U.K. from the many EU structures to which it is a party, and could take up to 2 years (or more if both the U.K. and the European Council agree to extend the discussion period).
Cameron has said this process would be irreversible.
"We should be clear that this process is not an invitation to rejoin, it is a process for leaving," he said in February, according to reports.
In the more immediate term, markets are going to react in a big way. The Brexit has no historic precedent. No precedent means volatility in markets, probably on a global scale.
Brexit Upends Global Markets as Stocks, Pound Plunge; Yen Soars
Global markets buckled as Britain’s vote on European Union membership infected every asset class.
The vote instantly creates the biggest global financial shock since the 2008 economic crisis, this time with interest rates around the world already at or near zero, stripping policymakers of the means to fight it.
Earlier, the value of the pound fell dramatically as the referendum outcome emerged. At one stage, it hit $1.3305, a fall of more than 10% and a low not seen since 1985.
The Bank of England said it was "monitoring developments closely" and would take "all necessary steps" to support monetary stability.
“It’s scary, and I’ve never seen anything like it,” said James Butterfill, head of research and investments at ETF Securities, said by phone from London. “We’re going to see outflows from basically any kind of cyclical asset. A lot of people were caught out, and many investors will lose a lot of money.”
The debate over the U.K.’s EU membership has dominated investor sentiment throughout June, with appetite for riskier assets having built up over the past week as bookmakers’ odds suggested the chance of a so-called Brexit was less than one in four. The victory for the "Leave" campaign will fan speculation that more countries could withdraw from the EU. Central banks are standing ready to intervene as reaction in financial markets proves reminiscent of late 2008, at the height of the global financial crisis.
David Cameron has resigned as Prime Minister.
“I am very proud to have been Prime Minister of this country for six years. I have held nothing back. I think the country requires fresh leadership. I do not think I can be the captain to take the country to its next destination. In my view I think we should have a new prime minister in place by the start of the Conservative conference in October." Mr.Cameron said
Dutch anti-immigration leader Wilders calls for Dutch referendum on EU membership
Dutch anti-immigration leader Geert Wilders called on Friday for a referendum on the Netherlands' membership in the European Union after Britain voted to leave the 28-member bloc.
Wilders, who is leading opinion polls, said if he is elected prime minister in March general elections in the Netherlands he too will call a referendum.
“We want be in charge of our own country, our own money, our own borders, and our own immigration policy," he said in a statement.
"As quickly as possible the Dutch need to get the opportunity to have their say about Dutch membership of the European Union."
A survey by a television channel Een Vandaag this week found that 54 percent of the people in the Netherlands, a founding EU member, want a referendum.
Crude-oil prices walloped as U.K. votes in favor of Brexit
Oil prices plummeted early Friday, coming sharply off a two-week high reached on Thursday, after the U.K.’s vote to leave the European Union in a nationwide referendum triggered a selloff across markets.
The U.K.’s vote to end its membership in the EU has spooked investors, sapping appetite for assets viewed as risky, including stocks and commodities, amid the uncertainty surrounding the next step for Europe’s trade bloc.
The global benchmark, Brent LCOQ6, -4.48% was trading down 4% at $48.15 a barrel. Its U.S. counterpart, West Texas Intermediate CLQ6, -4.41% was down 3.9% at $48.98 a barrel.
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