Today is the day that ‘Britain’ has left the EU after a 40 year relationship, which was not expected, particularly by bookies who had their bets on the ‘UK‘ staying in the EU. This is a truly historical and uncertain time for the ‘UK’ that has literally divided the country, with 48.1% voting to remain, whilst 51.9% voted to leave. The referendum that was neck and neck over the last few days has become a debate over the country’s identity and the value of Britain’s EU membership. After more than three years since David Cameron called for a referendum – becoming Prime Minister in 2010 – he unexpectedly resigned. Not long after ‘Britain’ were letting the ramifications of leaving the EU sink in, Cameron announced in a statement around 8:00am that he will remain as prime minister for the next 3 months, allowing the conservatives to elect a new leader. There are rumors circulating that former mayor of ‘London‘ Boris Johnson could become the next Prime Minister by October, but this is yet to be confirmed.
In Article 50 of the Treaty of Lisbon, the rules are brief, so, what is to come isn’t as clear cut, there hasn’t been a state to leave the EU, since the establishment of the EU 59 years ago. To implement Article 50 will be up to the next Prime Minister which has been advised to be in place immediately. Article 50 – the never used before law – will trigger the 2 year process of exit negotiations before the complete exit from the EU. Establishing trading relationships could be more complex and agreeing on free movement could prove to be an obstacle. The process of agreeing on new legislation and terms of these agreements could take up to five years according to EU leaders.
Since the news of ‘Britain‘ leaving the EU the pound fell to it’s lowest in over 30 years and European banks have had their biggest loss to date. Sterling is currently trading at 7pc lower against the dollar, which is at $1.3782. Head of research and investments at ETF Securities, James Butterfill said “It’s scary, and I’ve never seen anything like it…A lot of people were caught out, and many investors will lose a lot of money.” Many markets put their money in to remaining in the EU, but upon exit billions have been lost. European stocks witnessed their largest drop since 2008 whilst trading soared. Banks such as Barclays and Lloyds faced the hardest economic hit which fell to 25 percent, fluctuating between trade that was down by around 20 percent.
On the other hand analysts claim that because big banks were compelled to increase capital and liquidity levels, that they were in a secure place to handle the economic crisis at hand. Prices and interest rates are expected to be higher than before due to the weakening of the pound and according to S&P Global Ratings, the ‘UK‘ will lose its AAA credit rating. President Barack Obama, various high-profile companies and many other International leaders were against ‘Britain’ leaving the EU because of fears over the economic consequences. However, those in favor of ‘Britain‘ leaving the EU are confident about reclaiming the British economy and moving away from what they view as an ineffective governing body. Parties campaigning for ‘Britain‘ to leave the EU argue that the money spent on memberships hasn’t been well spent and that the money circulating back in to the economy isn’t balanced. Nevertheless those who wanted to stay in the EU argue that the fee for membership and the trade and economic benefits are necessary in order to protect Britain’s place in the world. In a statement – from three of Britain’s best economic institutions – they pleaded that voters voted to stay, claiming that ‘Britain‘ would “almost certainly” be in a worse place if they voted to leave.
Many have fueled anger towards those wanting to leave, regarding them as racist with the anti-immigration stance and the want to control borders, creating rivalry between those who wanted to leave and those who wanted to stay, but only time can tell whether leaving the EU was the right thing to do or not. It is clear that the UK’s economy has declined since the decision to leave the EU, but there is still hope and we will have to wait and see if this is just a hiccup and if Britain can establish new trading relationships in ample time and recover from the economic loss from many investors and companies. According to The Bank of England, European Central Bank and the People’s Bank of China, they are already willing to help provide liquidity if the ‘UK’ needs it, in order to stabilise the global market. It is already a long road to exiting the EU, with at least 2 years before a complete exit can happen and the requirement for the activation of Article 50, before we have a complete idea of what the future ‘Britain‘ will be like. Are we better off independent and is this truly a good thing for the UK? or did we mess up? Leave a comment below to let us know your thoughts. More updates to follow as the story unravels.
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