This is a bold statement but this is what my heart and mind believe at this stage. This is my personal opinion and doesn’t reflect the views of my employer.

Brexit Overview

On June 24th, 2016, the geopolitical landscape in Europe shifted in such a way that plunged global markets into chaos. The United Kingdom held a referendum on whether or not to leave the European Union (EU), and it was recently announced that the “Leave” movement won with 52% of the national vote, and that the UK will be officially withdrawing from the EU. The referendum turnout was 71.8%, with more than 30 million people voting. It was the highest turnout in a UK-wide vote since the 1992 general election.

Political Disagreements

Despite a 52% win for the ‘Leave’ movement, much of the momentum gained by the ‘Remain’ side was centralized within three strategic areas within the UK, Northern Ireland, Scotland and London. This overwhelming support for ‘Remain,’ in highly populated areas has resulted in much conflict and disarray following the vote result, as protests break out in London and Edinburgh in support of staying within the EU, and the SNPs Nicola Sturgeon has publicly stated that another Scottish Independence Vote is ‘highly likely’ following the vote to leave the EU. This is only the beginning of the inter-UK conflicts that have arisen as a result of the uncertainty, confusion, and narrow victory-margin following the referendum vote. We personally believe that, as a result of this substantial public outcry, legal uncertainty, and heated political debate; the UK will remain within the EU for at least the foreseeable future.

Immediately following the ‘Leave’ win, Scotland’s First Minister Nicola Sturgeon stated that the Scottish government would immediately engage in talks with the EU to protect Scotland’s position in the bloc. She said that steps were actively being taken regarding a possible second Scottish independence referendum. This tension is not limited to Scotland either. In North Ireland, Deputy First Minister Martin McGuinness has called for a border poll on a united Ireland. In a more bizarre case, the people of London signed a petition for their metropolis to stay in the European Union today, as Mayor Sadiq Khan said the city must have a say in Britain’s exit negotiations. The fact that these large regions of the UK would actually prefer to leave the UK rather than part from the EU demonstrates the large discontempt with the ‘Leave’ decision, and sets the stage for prolonged uproar from the large concentration of people who wished to stay.

Politics may interfere with the ‘Leave’ Movement

Many do not realize it, but David Cameron may have effectively annulled the decision of the referendum by stepping down immediately, before invoking Article 50, the trigger which would begin the removal process. When David Cameron resigned, he triggered a race for the new conservative leadership, and a series of elections to take place this Autumn. However, on the day of his resignation, the enormity of the Brexit decision started to sink in. The market volatility, GBP depreciation, Scotland, the Irish border, the Gibraltar border, the frontier at Calais, the need to continue compliance with all EU regulations for a free market, re-issuing passports, British citizens abroad, EU citizens in Britain, the mountain of legislation to be torn up and rewritten. The headache of invoking Article 50 became evident immediately.

With calls for a new general election from some MPs, there is a large possibility that the decision to invoke the article could become a large political issue for the involved candidates. Many British citizens will be exposed to the truth regarding the serious implications of a British exit from the EU, after living with months of economic volatility and currency fluctuations. Who will want to have the responsibility of all those ramifications and consequences on his/her head and shoulders?

Changing Public Sentiment

Immediately following the announcement that the ‘Leave’ movement had won the vote, the GBP plummeted from ~1.50USD to ~1.34USD, its lowest level since 1985. On Thursday June 23rd, the FTSE 100 closed at 6,334.63 GBP. At market open on June 24th, it opened at 5,926.40; representing a 6.4% drop overnight after the vote was announced. These are clearly not coincidences, and the British public have been made aware of the immediate implications a Brexit ‘Leave’ vote is having. Even if the ‘Leave’ voters are not concerned with the daily fluctuations of the FTSE or the GBP, eventually these factors are going to affect their day-to-day lives. A depreciated GBP means that imports become more expensive, which is especially relevant concerning petrol, natural gas and other commodities upon-which British citizens are heavily reliant. Imported food, especially from EU nations upon-which Britain is heavily reliant on for food imports, will become increasingly expensive as the GBP continues to depreciate even against the Euro. Given enough time passed, base commodities such as salt, sugar, tea and other heavily consumed goods would increase in price as well.

Business Impact

In London, and across the UK, many large corporations are considering whether to re-locate their operations to other nations; as the uncertainty surrounding the UK’s future economic position dampens the immediate economic outlook. London has previously been one of the most powerful financial hubs in Europe, partially attributed to its position within the EU. However, following the ‘Leave’ vote, many banks have already began to move their operations out of Britain. HSBC stated prior to the vote that it would move as many as 1,000 trading jobs to Paris in the event of a Leave. However, because the bank already has a Paris office, it could defer any decision until right before the UK’s exit comes into effect. This form of corporate ‘blackmail’ could influence the public perception of the ‘Leave’ movement, and since Article 50 has yet to be invoked, there is time for public perception to shift.

Finally, the lead campaigners behind the ‘Leave’ movement have not given their followers much to be confident about in the days immediately following their supposed victory. On June 24th, the day following the vote, Nigel Farage backtracked on his previous statement that “the £350m a week that the UK typically send to the EU would instead be given to the NHS.” Another instance on June 26th reinforced this uncertainty, when the Sky News political editor, Faisal Islam, was told by an anonymous Tory MP that the ‘Leave’ movement had no post-Brexit plan. All of these events are instilling a sense of fear in many of those who initially voted ‘Leave,’ and this is expected to be amplified in the months to come as more implications of the vote become evident and felt by the public.

Re-Starting Negotiations

If public perception changes as we expect it to, then the resignation of previous PM David Cameron can be seen as a blessing in disguise. Over the next few months we expect that the implications of the ‘Leave’ decision will start to trickle-down to the everyday lives of Brits everywhere, and this will cause a lot of disarray and frustration within the public. If this is the case, it will be very tough for the ‘Leave’ campaigners to continue the momentum of the movement, and when the time comes, convince the general public that it is still a good idea to invoke Article 50. A more likely alternative, is that a more reasonable leader is put into power who would be willing to re-start negotiations with the EU, perhaps to form a new agreement or even to propose the idea of a second referendum.

Much of the frustration that led to the public desire to leave the EU stemmed from the economic downturn of 2008, and the slow recovery since. Now that David Cameron has resigned, the public has the opportunity to step back and reflect upon what it is they are really frustrated about. If the ‘Leave’ movement decision has already caused this many economic issues, perhaps their perception of the EU will change; and new party candidates will seek to exploit this changing attitude. Tim Farron, the leader of the Liberal Democrats, has already stated that his party will stand on a platform of staying in the EU, and de-railing the Brexit decision at the next general elections. As more issues with the ‘Leave’ decision become evident, we expect more political parties to adopt this view to their platforms.

Is the Referendum Binding?

Short answer is: no. The referendum results are not binding, however it would be a blatant disregard of democratic principles to suggest that parliament ignore the results. A more reasonable argument would be to analyze the structure of the referendum. 72.2% of eligible voters turned out to vote in the referendum, which resulted in a ‘Leave’ victory of a mere 52%. Based on this turnout, such a close result should be scrutinized further by the government, and this fact could be utilized by parliament if they decided to issue a second referendum. Secondly, there is the issue of the Brexit potentially causing a break-up of the UK itself, as Scotland and North Ireland have both stated their intentions of implementing independence referendums if the Brexit vote goes through. Therefore, parliament has a lot of material which could be used to convince the public that a second referendum, or even the blocking of the first referendums results, would be in the best interests of the nation.

It is my opinion that the most likely scenario is that the EU will sit down with the UK and negotiate a better deal on their behalf, to motivate them not to go through with the Brexit. If this is the case, then both parties (Leave & Remain) would be left better-off, however more strain would be placed on the EU itself as it loses a good portion of the UK’s net contributions. Should we witness another debt-crisis in Greece or Italy, we could see the EU being in a lesser position to provide assistance and stability within the region.

Summary

Regardless of what happens in the future, the divide between UK citizens brought about by the referendum process will take some time to resolve. Too often have we allowed issues of economics and politics to interfere with our unity as a nation, and cloud our view as-to what the United Kingdom represents as a nation. Isolationist policies further divide and separate us from our European neighbours, with whom we’ve had a constructive and productive relationship in the past. Following a Brexit from the EU, the United Kingdom will no longer represent a thriving epicentre of globalization and economic progress, however it is apparent that this is what the majority of UK citizens wanted anyway.

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What do you think?