Six Things We Learnt From the EU Referendum
The United Kingdom’s historic vote to leave the European Union surprised millions around the world. The subsequent explosion in media commentary and market turmoil has done little to guide, reassure or unite people around a path forward. CNC has listed the six things you need to know, and some key articles you need to read. Our aim is to help you understand the impact of Brexit.
A nation divided – and a call for unity.
The result revealed stark differences across geographies and age groups in the UK. While most of the governing elite and professionals in the South East voted Remain, many older voters across the UK – and a significant percentage of the electorate in Wales, the Midlands and the North – voted out. The result has sparked an emotional response by those who feel the margin of victory is too small – with many blaming ignorance and social demographics for the result. The UK today is a divided society. Many families are divided, too. One of the key challenges facing the government and next Prime Minister is to unite the nation.
FACT: 52% of voters chose Leave. But there was a huge generational divide: 75% of people aged 18-24 voted Remain. Among those aged 65 and older, only 39% did. The result surprised financial markets, politicians, commentators and businesses. Most expected a Remain victory.
LOOK AT THIS: Breakdown of referendum results by region
READ THIS : Thoughts on the sociology of Brexit
UK & European politicians were not prepared for the result, and it will change the faces of politics.
With some in the Leave camp conceding defeat late on the day of the vote, it seems that until the results came in all sides had expected a Remain vote. Fast-forward 12 hours and the impact was seismic. David Cameron announced his intention to resign as Prime Minister. The same day saw the stirrings of a no-confidence motion against the opposition leader Jeremy Corbyn. Labour MPs accused him failing to convince Labour voters to vote Remain, and indeed of actively “sabotaging” the Remain campaign. The Scottish First Minister, Nicola Sturgeon, started pushing for a second referendum on Scotland’s independence. Meanwhile, the Liberal Democrats – the fourth largest political party in Westminster – will go into the next general election with a pledge to take the UK back into the EU.
FACT: A vote of no-confidence in the opposition leader, Jeremy Corbyn, has been tabled. Two-thirds of his shadow cabinet have resigned in the wake of the vote.
The Government and Bank of England had prepared, but were powerless to prevent the shock to the markets.
The Governor of the Bank of England responded quickly to reassure the markets. However, sterling suffered its biggest one-day sell-off in recent history, and the Brexit result wiped $2 trillion off the S&P Global Broad Market Index. The long-term impact remains to be seen, but bank stocks and housebuilders in the FTSE 350 suffered particularly badly as many investors forecast a UK recession, leaving them susceptible to takeover bids. Yields on 10-year government bonds sank below 1% for the first time on Monday.
FACT: In morning-after trading, the FTSE100 plunged as much as 8%, but recovered to close down 3%. Interestingly, stock markets around Europe saw bigger losses: the French CAC closed down 8%, while Germany’s DAX index dropped 10% before closing down 6.8%. The main indices in Italy and Spain both dropped more than 12%. Second-day trading on Monday followed a similar path. On Monday evening, after markets closed, S&P announced it was downgrading the UK’s credit rating by two notches from AAA to AA.
READ THIS: Mark Carney’s statement on Friday morning
So, the UK is leaving the EU. Aren’t we?
The formal process of negotiating an exit from the EU will start once the UK formally triggers Article 50. This has not yet happened, and despite expectations that it would happen immediately after the vote, it now won’t happen until a new Prime Minister is in place – as late as 2 September. EU leaders want it to happen sooner rather than later. Brexiteers now want to trigger Article 50 only once it’s clear what kind of UK-EU relationship is on offer. At the same time, Remain campaigners are desperately seeking ways to challenge the implementation of the referendum. The success of these challenges remains to be seen, but it seems unlikely any government could entirely ignore the vote. However, with David Cameron’s resignation and the resulting leadership contest, will there be calls for another general election before the referendum can be implemented? And could that election somehow “revoke” Brexit?
FACT: The referendum was in fact only advisory. The implications of this are still unclear. Furthermore, in 2014 Scotland voted narrowly to remain part of the UK – on the premise of continued EU membership. The Brexit vote is now prompting Scottish politicians to call for a second independence referendum.
READ THIS: Brexit loophole? The Independent
The EU is under scrutiny from within.
Many Leave supporters have long decried the power of unelected politicians in Europe. Even the Remain voters saw the EU as “better the devil you know”. While European leaders rallied to protect the union, some have started to look at the EU’s internal problems that led to the referendum. And Jean-Claude Juncker, the President of the European Commission, is under fire for his handling of the negotiations with the UK earlier in the year.
Global impact. The reverberations of Brexit are being felt beyond Europe. Some fear Brexit could cause the next global recession, while others cite poor economic data and stock market performance pointing in the same direction. EU leaders are concerned about contagion. Some EU politicians from fringe parties are already calling for referenda in their countries. Many also worry about the impact of this result on the upcoming US elections.
FACT: Despite much speculation, the extent of the impact of Brexit remains to be seen. The fundamentals of the UK economy have not changed (yet) – this is still one of the strongest economies in Europe.
AND FINALLY – WATCH THIS SPACE
These are key events to watch:
- Conservative leadership contest to become the next Prime Minister – nominations by Wednesday, results by early September.
- Labour party vote of no-confidence in its leader Jeremy Corbyn.
- UK markets vs European markets – who will be the true losers?
- EU meetings in Brussels this week.
Originally published on www.cnc-communications.com
Anna is a financial PR expert and has been a part of the CNC Comms team since May 2015, prior to that she was an Associate Director with Capital MS&L. Connect with her on Twitter @AnnaDaviesUK