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Brexit leaves the UK and beyond picking up the pieces
WITH the leave-or-remain question now answered, the European Union (EU) will now have to negotiate fair-trade deals with the UK and reform a Brussels bureaucracy that has become increasingly undemocratic.
The "Brexit" crash, accentuated by traders who had wrongly speculated that Britain would vote to remain in the EU, has shocked the political, business, financial establishment and led to the resignation of Prime Minister David Cameron.
In the short run, uncertainty will prevail, but in the medium and long term, the next UK premier and his Cabinet will have to do their best to counter negativity about the UK economy, trade financial services and investment - the very message of Brexit campaign leaders Michael Gove, Justice Secretary and former mayor of London Boris Johnson and Labour opposition MP Gisela Stuart.
Mr Cameron said he plans to let his successor activate Article 50, the starting point for talks on Britain's final exit from the EU.
In his address outside 10, Downing Street, he said: "The British people have made the very clear decision to take a different path. I think the country requires fresh leadership to take it in this direction. I do not think it would be right for me to be the captain that steers our country to its next destination."
But Mr Johnson, now a front-runner to be next prime minister, said there was "no need for haste" about severing the UK's ties and that the UK was "no less united...nor indeed any less European" following the vote to quit the EU.
Once the application under Article 50 of the Lisbon Treaty is made, it must be completed in two years. The period can be extended if the remaining 27 EU members agree. Trade and financial dealings will continue as normally as possible, but business contracts are likely to be modified in the interim.
In a statement, Mr Johnson insisted that the UK was not "turning its back" on Europe, and that the decision would not make the UK any less tolerant nor outward looking and would not reduce opportunities for its young people.
Despite the time frame for Britain to settle down, major firms in Britain, Europe, Asia and the US fear that Brexit could hurt profits and jobs.
Britain might be forced to renegotiate trade pacts country by country, they have warned. The free flow of labour between the UK and the EU could ebb; research establishments are worried about research funding.
But many small British business owners are happy that they will now be unencumbered by EU regulations, while Labour voters believe that massive immigration into the UK will ebb, as will the threat posed to their jobs and wages. Indeed, it was the Labour vote in northern England, the Midlands and Wales that gave the Brexit campaign its victory.
They countered Scotland, which wishes to remain in the EU and has threatened another referendum on leaving the UK.
In the short and possibly medium to longer term, the financial and economic fallout could be serious, say commentators - not only because of impact on the UK, but because of acute uncertainty in Europe. This weekend, Spain holds its elections; polls indicate a swing to the left. Polls elsewhere in the EU have also revealed large parts of Europe to be struggling with unemployment and job insecurity and who dislike their own leaders and the unelected Brussels bureaucrats. French, Dutch and other EU nationalists have threatened referendums on their EU membership if elected.
Globally, stock markets are struggling with the slowdowns in the US and China, while geopolitical concerns include the unstable Middle East and the US presidential election.
The fear is that Brexit will catalyse the long-expected decline of Wall Street and other stock markets, which have become inflated by easy money and zero or negative interest rates. Illustrating these fears, European stock markets fared worse than that in the UK. From referendum to the Brexit camp's win, the Spanish stock market plunged 19.3 per cent, Italy by 16.6 per cent, France by 14.4 per cent and Germany by 12.8 per cent. But the UK's FTSE 100 index fell 11 per cent and the mid-sized 250 index, 12.7 per cent.
Brexit could place further pressure on the sterling because of the local economic and political fallout, several investment banks have predicted. Following the negative campaign threatening higher taxes and spending cuts in the event of Brexit, Chancellor of the Exchequer George Osborne could well be forced to resign, say political observers. Bank of England governor Mark Carney has also been criticised for intervening in the political process with dire predictions, so his position is also threatened. His saying that the Bank would intervene to curb volatility helped the sterling to recover slightly. Indeed, in the 24 hours of market gyrations, it tumbled 17 per cent against the yen, 12 per cent against the US dollar, by 11 per cent against the Swiss franc, 10 per cent against the Singapore dollar and 9.5 per cent against the euro.
Bankers and business people in London called on the UK government to swiftly detail policies on Britain's international economic, financial and political deals, with not only Europe, but with the US and Asia as well.
Carolyn Fairbairn, director-general of the Confederation of British Industry, said: "The urgent priority now is to reassure the markets. We need strong and calm leadership from the government, working with the Bank of England, to shore up confidence and stability in the economy."
Mr Johnson said: "We can find our voice in the world again, a voice that is commensurate with being the fifth-biggest economy on Earth. I believe we now have a glorious opportunity: we can pass our laws and set our taxes entirely according to the needs of the UK economy."
In Singapore, the Ministry of Trade & Industry said Britain would need to negotiate new trade agreements with its trading partners as it was no longer covered by existing trade agreements following Brexit.
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