Brexit is now very close to a reality - JKHC-NEWS(1)

Brexit is now very close to a reality. As of 4 p.m. Greenwich mean time. The LEAVE votes are 900,000 ahead of the STAY votes with about 5 million votes to be counted. I think the LEAVE campaign has won. This is historic for the better or for worse. I think financially and economically it will be worse for both UK , EU and the world economy. The dream and ideal of a strong and unified Europe started in the 1960s with the Common Market has been shattered. I think the main reason for the victory of the LEAVE votes is immigration. Very unfortunately this also reflects on the fast changing world political move to the far right ( another form of extremism that lead to the rise of Hitler and his likes ). Look at the near win of the far right in electing a president in Austrian a month or two ago and the popularity of Donald Trump if US politics. However, we must respect the choice of the people under the democratic principle and endure the consequences regardless.

What will happen :-

(1)         Far right views means protectionism politically and economically. This must mean less free trade, less cooperation and less freedom of movement for factors of production and less competition reducing efficient utilisation and distribution of resources.  There will be economic recession in UK which will inevitably affect world trade adversely.

(2)         History has taught us that protectionism and far right views will generally lead to isolationism like USA before WWII. This will be bad for world cooperation which should be improved to face global problems.

(3)         Immigration is a doubled edged sword. While it will be a burden to the host country talents among the migrants will ultimately contribute to the economy of the host country.

(4)         EU originally formed to counter the economic might of USA to provide more world competition will be weakened.

(5)         Likewise, national defence and military unity most importantly against Russia will be considerably weakened.

(6)         Scotland may seize on the opportunity to become independent from UK or even choose to remain in the EU if her citizens so wish.

(7)         The British credit rating and the Pound Sterling will suffer.

(8)         The world financial market will experience turmoil because of the uncertainty created by Brexit at least in the short term,

(9)         The success of the LEAVE campaign against clear financial advice may even inspire the Donald Trump’s US presidential bid with more US voters embracing the new idea of “ no need for political correctness “ which means no need for rational and practical considerations.

(10 ) David Cameron will most probably have to resign.

UK has always been in a privileged position in the EU as reflected by the following:-

(1)         UK is allowed to use her own currency ( the Pound Sterling instead of the Euro ) meaning she can follow her own policy with regard to interest rate as a monetary tool.

(2)         UK is allowed to place limit on social benefits to immigrants from other EU countries.

(3)         UK is geographically distant from the current influx of war refugees.

(4)         UK was given more concessions in the recent negotiation with EU on the Brexit issue.

There is strength in numbers but one cannot both have the cake and eat it. There must be some price to be paid in order to enjoy EU membership and benefits. Unfortunately, UK’s majority citizens have chosen not to pay the price but rather to face almost certain economic recession and other uncertainties such as national defence in leaving the EU. Let us hope the fall out from UK’s leaving EU will not cause another global financial crisis.