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.
