Decision day is today. The polls have the Brexiteers almost neck-and neck with the Bremainers. The case of a vote to remain is a little more straightforward – with more of the same but with greater infusions of a more Eurosceptic flavor to be expected. Indeed, some commentators have remarked than in either case of a vote to remain or to leave, the Brexit brigade will be the big winners from the referendum, having stirred the anti-EU passions of the British people. But in the scenario that Brexit did win out, what might happen?
The beginning of a long, arduous divorce
Based on the Treaty for the European Union, the United Kingdom would have a two-year process of negotiation of new terms of co-existence in case of Brexit. However, the lack of clarity on what kind of deal Britain seeks in leaving the EU will surely serve to add to this timespan. Some commentaries have alluded to the fact that the European Council would be willing to offer David Cameron drastic concessions in a last-ditch effort to hold the marriage together. However, officials on the British side have rejected this idea, saying that the will of the people must be respected. Some experts suggest that it could take 5-7 years for Britain to conclude negotiations for a Brexit. In any case, both France and Germany have warned that Britain can expect no favours.
A Brexit could mean an economic recession
A somewhat less controversial issue is the impact that Brexit will have on the UK economy. The Bank of England, the IMF, the OECD and several other independent bodies have predicted that GDP in the UK will shrink. The markets are already jittery in anticipation of the referendum – should the Brexit fears be realized, the likelihood would be that the value of the pound would plummet, house prices would fall dramatically, and inflation would rise well above the 2% target rate of the Bank of England. Borrowing costs would also increase dramatically, while output would fall. Furthermore, depending on the negotiations of Brexit, the UK could also be stripped of its ‘passporting’ rights to provide financial services in the rest of the EU. In this case, London would lose its attractiveness as a financial hub and might lose its ‘City’ in favour of Paris or Frankfurt and other stations in the EU.
The continued rise of populism throughout the continent?
The very fact that this referendum is even taking place is a testament to the rising force of radical-right wing populism, which has mobilized not just in the UK, but across the European continent. A Brexit would be emblematic of the potency of this force, and could galvanise other populist right-wing parties on the continent, already a growing force in the European Parliament. With a French election looming, Marine Le Pen will be hoping to harness the anti-European energy across the Channel and bring it to her own election campaign. In Holland, Geert Wilders’ meteoric rise to the summit of the domestic political scene has great parallels with Nigel Farage in the UK. His strong views on sovereignty and migration, notably Islam, chime with UKIP’s mission, while his charismatic and relatable persona have won him great popularity. While it is highly improbable that Brexit could precipitate a domino effect, the impact will surely be felt of a victory for populism.