Britain won’t be a part of the European Union anymore, and the U.K.’s prime minister has already resigned, financial markets are reeling and some say the move could signal the beginning of the end for the EU.
In a historical move that could come to alter Britain’s place in the world and shake up the political scene, voters decided to leave the EU, winning out over the pro-remain campaign by 52 percent to 48 percent.
Shortly after the vote tally, British Prime Minister David Cameron, who had been in the pro-stay camp, announced his resignation.
“The British people have made a very clear decision to take a different path, and as such I think the country requires fresh leadership to take it in this direction,” the prime minister said, standing in front of his 10 Downing Street office and residence. “I will do everything I can as prime minister to steady the ship over the coming weeks and months, but I do not think it would be right for me to try to be the captain that steers our country to its next destination.”
Cameron said the country should aim to have a new prime minister in place by the start of the Conservative Party conference in October.
Looking to provide some reassurance, Cameron said, “Across the world, people have been watching the choice that Britain has made. I would reassure those markets and investors that Britain’s economy is fundamentally strong.”
He added, “And I would also reassure Brits living in European countries, and European citizens living here, that there will be no immediate changes to your circumstances. There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold.”
Fundamentally strong or not, the British pound (which the U.K. had retained instead of switching to the euro) fell as much as 10 percent after the leave vote, to its lowest levels in more than 30 years. The pound is now hovering around 8 percent down, with 1 pound bringing in $1.37.
Big banks like Barclays, Lloyds and RBS saw stocks fall as much as 30 percent.
The FTSE 100 Index (London’s share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization) is down 2.25%, and the Dow Jones Industrial Average is down 2.4%. Similar measures in Frankfurt and Paris fell between 6 and 7 percent. Japanese stocks suffered their worst day in five years, with the Nikkei Stock average closing down nearly 8 percent.
Already, economists are saying the U.K. has slipped from its fifth-place spot as the world’s largest economy, to sixth.
Though the prime minister said there’d be no initial change to the way the U.K.’s goods can move, the future holds a host of uncertainties.
Many of those who supported Britain bailing on its EU economic partnership are proponents of free trade and argued that the country might be more successful with fewer barriers against trade with faster-growing economies in Asia, Africa and the Americas.
“They’re convinced Britain should accelerate trade deals with all these places—and are committed to doing so once outside the EU,” Mike Flanagan, CEO of U.K.-based apparel sourcing consultancy Clothesource, said, adding that the free-trade supports are confident they can get enough like-minded people elected to speed approval for such negotiations.
“We might see a flood of trade deals in five years or so. But I think the chances are close to zero,” Flanagan said. “Indeed, I’d go further. I think Britain’s access to the world’s markets will develop at a snail’s pace.”
President Obama has already said that a solo Britain would have to wait as long as 10 years for a trade deal with the U.S., though the already underway Transatlantic Trade and Investment Partnership (TTIP) between the U.S. and EU was supposed to be settled before 2016 came to a close.
There’s little telling what will happen with UK manufacturing down the line either.
“Brexit repercussions for the UK manufacturing industry will be questioned by many over the next few weeks and months. What we do know is that the integration across a supply chain is king,” Dr. Christos Tsinopoulos, senior lecturer in operations and project management at England’s Durham University Business School, said. “Supply chains know this and over the years there have been several efforts to bring manufacturers closer together. However, the key point here is that to make this happen there needs to be a degree of standardization in legislation, systems, policies and even engineering methods.”
Outside of trade and manufacturing, some are saying Brexit could signal the beginning of the EU’s demise. Scotland has already hinted at another referendum to leave the U.K. so that it can remain part of the EU.
Early polls from places like YouGov have indicated more countries may want to quit the EU than stay post-Brexit.
Flanagan feels otherwise.
“Britain’s no longer unique in its public dissatisfaction with the EU, which is now less popular in France than in Britain. It’s tough to see any way it might turn into a formal leave referendum anywhere else,” he said. “Other Europeans’ growing hostility to the EU, though, may spill into a tougher sell for new trade deals like the TTIP, or into hostility elsewhere in Europe to negotiating trade deals with developing countries like India or China.”