Brexit tremors rock the world
Britain voted to break away from the European Union on Friday, shattering the unity of a 60-year-old continental bloc, prompting the exit of Prime Minister David Cameron and rattling the world of finance and business.
Uncertainty gripped London and Brussels as the British public voted 52% to 48% to leave the EU in a record turnout of 72%. Amid joy and dismay, the clearly dis-United Kingdom appeared set for choppy waters as it begins the process of extricating itself from the 28-member bloc by the end of 2018.
The historic vote triggered seismic tremors in equal measure in politics and business. Global financial markets plunged, the pound fell as much as 10% against the dollar, the lowest since 1985, and Cameron set in motion the process of electing a new leader of the ruling Conservative Party by October — most likely to be former London mayor Boris Johnson.
In India, shares fell more than 4% on the news but recovered by half after authorities moved to calm investor worries. The benchmark BSE ended 2.2% down, its biggest single-day percentage fall since February.
But the rupee was the worst hit, dropping to 68 to a dollar at one point, before statements from finance minister Arun Jaitley and RBI governor Raghuram Rajan steadied sentiments. Both said a solid economy and planned government reforms would allow the country to withstand any major impact from Britain’s vote to leave the EU.
Back in Britain, its borders faced being redrawn after Scotland voted to remain in the EU and First Minister Nicola Sturgeon said another referendum on its independence was now a distinct possibility. Scotland had voted in a 2014 referendum to remain in the UK.
The outcome also raised the prospect of a border coming up between the Republic of Ireland (an EU member) and Northern Ireland, as well as between Scotland and England eventually. The voting pattern revealed a “Leave” vote in England (which has the largest population) dragged the whole of the UK out of the EU.
As results trickled in on Friday morning, top political leaders, observers and journalists ran out of superlatives to describe the rapidly moving developments and struggled to make sense of the result that reversed the proEU decision of Britain’s 1975 referendum.
Johnson, one of the leading lights of the Vote Leave camp, was widely tipped to be the next Conservative leader and the next prime minister, after Cameron said he would stay on till October to ensure stability and enable the selection of the next party leader. The next prime minister will lead the two-year process under Article 50 of the Lisbon Treaty to exit the EU.