Lessons from UK’s EU referendum

BREXIT: What will happen to the 1.5 million Britons who live and work in Europe and the 3 million Europeans who live and work in the UK?

THE political entity known officially as the United Kingdom of Great Britain and Northern Ireland decided to end its membership in the European Union last Thursday. This decision is momentous in many senses, and not merely for the voters of the UK and for Europe, but many around the world.

After four decades, it is safe to say that more than the 16.1 million who voted to remain in the EU would have crossed their fingers that the UK would not exit Europe. But it has, and like it or not, the consequences, many of which are still uncertain and just unfolding, will have to be dealt with.

The effects on the pound sterling and global stock markets have already been felt and will continue gyrating over the short term as markets adjust to the new and emerging realities.

UK interest rates are seen to be heading to close to zero with the possibility of more quantitative easing as the Bank of England strives to stave off any liquidity crisis.

This will keep the sterling closer to its present lows than pre-Brexit highs, a short-term advantage for its exporters, but one that will last only until the UK formally exits the EU and is able to establish its own trade arrangements.

The EU is UK’s single largest trading partner, with more than half of its exports going to the continent and trade negotiations are going to be critical. It also seems increasingly likely that the UK’s exit from the EU will revive moves for Scottish secession and raise the prospect for further turmoil on the British Isles.

The Scottish Independence referendum in 2014 was defeated by a 10 per cent margin but the difference in the votes of those wishing to remain in the EU is far larger and could swing the pendulum. If this were to happen, and