BRITS QUIT!
Vote stuns the world, rattles markets
Great Britain has voted to leave the European Union in an earthshaking referendum that has sent tremors through world markets and signals a crisis for the 28-nation economic bloc with other countries likely to consider similar exit votes — even as the U.K.’s “Brexit” voters exulted.
“Let June 23 go down in our history as our independence day,” said U.K. Independence Party leader Nigel Farage, who had argued that Brexit — short for British Exit — was the only way to protect Britain’s sovereignty and control EU migration.
During the tight election that saw early projections of a “remain” vote swiftly shift to “leave,” the BBC early this morning forecast that 52 percent of voters opted for Brexit, while 48 percent wanted to stay in the world’s biggest economic bloc.
Global financial markets dived today as media reports forecast that voters had opted to leave the European Union, shocking investors and triggering jitters across
the globe.
Tokyo stocks plunged more than 7 percent and South Korea’s Kospi tumbled about 4 percent. Crude oil prices and U.S. futures also took a big hit. The British pound plummeted more than 10 percent in six hours while the yen surged nearly 4 percent to the U.S. dollar as investors seeking safety snapped up the Japanese currency.
By early afternoon in Asia, all main U.K. broadcasters predicted that Britain had voted to leave the 28-nation union. The “leave” side was ahead by 51.7 percent to 48.3 percent with more than threequarters of votes tallied, making a “remain” win a statistically nearimpossibility.
Japan’s Nikkei 225 plummeted 7.2 percent to 15,063.41 while South Korea’s Kospi sank 4.2 percent to 1,903.84. Hong Kong’s Hang Seng index tumbled 4.8 percent to 19,881.59 and Australia’s S&P/ASX 200 fell 3.7 percent to 5,088.20.
Observers were predicting dire consequences for the European Union itself, as well as Britain and the United States.
“It will weaken the EU,” said Alan Clayton-Matthews, an economist at Northeastern University. “Britain is a major economy. … This will be a blow to the EU. The major blow is, with other European countries, if Britain did it, they might do it, too.”
The British vote not only sets an example others might follow, but puts pressure on the European Union to reform.
Stephen Farnsworth, a political science professor at the University of Mary Washington in Fredericksburg, Va., said there will be ramifications in the United States.
“The U.K. is one of the closest allies to the United states. Having a close ally like the U.K. in the EU, means the EU is more likely to cooperate with America. If the decisions are made without the U.K., the EU may be less inclined to work with the U.S. forging policy,” Farnsworth said. “If the EU and U.K. have to deal with some kind of renegotiating of their status, that will be bad for their business. If you have manufacturers in the United Kingdom that want access to the European market, and the U.K. is out, that may mean those manufacturers may have to relocate. … For American companies doing business in the U.K., Brexit might be a very expensive proposition. The financial consequences of trying to go at it alone are pretty severe.”
The EU’s Brexit crisis started three years ago with Prime Minister David Cameron’s promise in January 2013 that if his Conservative Party won the next election, he would renegotiate the U.K.’s relationship with the EU and let the people choose whether to stay or go. It’s been fueled by Europe’s immigration crisis, with a largely unchecked flow of refugees and economic migrants straining budgets and raising fears that nations are being culturally overwhelmed by foreigners.
In December 2015, Cameron presented EU leaders with the U.K.’s four demands: to restrict migrants’ access to benefits; to let the U.K. opt out of the EU’s ambition to forge an “ever-closer union”; to reduce bureaucracy; and to ensure that countries like Britain that don’t use the euro currency are not disadvantaged. Cameron achieved enough concessions that he pledged to campaign for “remain.”
The Brexit vote is now seen as likely to cost Cameron his job, with former London Mayor Boris Johnson, the most prominent supporter of the “leave” campaign, seen as a leading contender to replace him.
Yesterday, and late into the night, politicians, pollsters and bookies suffered whiplash as results veered back and forth between “leave” and “remain” in tight elections across England, Scotland, Wales and Northern Ireland.
The “leave” side became the betting favorite for the first time late last night, with the Betfair market that had favored “remain” by as much as 75 percent predicting a 51 percent chance of Brexit, after stronger-than-expected results for the out campaign in key parts of England and Wales. Bookies’ odds on Brexit also shortened to as short as 6-5. They had been 5-1 only hours earlier.
The British pound see-sawed dramatically — initially soaring as polls closed and two opinion surveys put “remain” ahead and two leading supporters of the “leave” campaign said it appeared the pro-EU “remain” side had won.
But it then plummeted as Britain’s first few counting areas reported their results, showing the “leave” vote was stronger than expected — setting the stage for a nerve-wracking night of ballotcounting after a day of high turnout and foul weather.
As the polls closed yesterday, Independence Party leader Farage set a downbeat tone for his fellow Brexit supporters, telling Sky News television “it looks like ‘remain’ will edge it” in the referendum, sending the pound to a 2016 peak of $1.50. But he walked back those comments later, telling reporters at a “leave” party in central London that “maybe just under half, maybe just over half of the country” had voted to pull Britain out of the EU. Early today the pound was trading at about $1.453 after having plummeted all the way to 1.443.