What are the implications of Britain’s decision to split from the European Union? Here are some of the questions that people have been wondering about and a few scenarios — both immediate and long-term — in a post-Brexit future:
Not-So United Kingdom: Scotland and Northern Ireland voted to remain in the EU. Scottish First Minister Nicola Sturgeon said that following the vote by England and Wales to leave, a second referendum on independence for Scotland was likely. A poll conducted by ComRes found that far more people in the U.K. (53 percent) think it is likely that the four-entity union will no longer exist in 10 years’ time than think England can win a major soccer tournament (13 percent).
Confusion: Some in the U.K. wondered if they would need to get new passports. They don’t. There is no such thing as an EU passport. Britain is also not a part of the EU’s passport-free travel area known as the Schengen zone.
Property: House prices are expected to fall across the U.K. in the next three months and continue to remain lower for the next year, at least in London and East Anglia, the Royal Institution of Chartered Surveyors said. Luxury property prices have fallen to their lowest level since the global financial crisis.
Sterling: Immediately after the referendum, the pound fell to a 35-year low against the U.S. dollar. After the Bank of England elected to hold interest rates steady in July, the pound rose 2 percent against the dollar — its best showing since 2009. It is not, however, back to its pre-Brexit exchange rate.
Interest Rates: Currently at 0.5 percent, rates could be cut to a record-low 0.25 percent in August to encourage businesses and individuals to spend, rather than keep their money in the bank.
Growth: HSBC has halved its 2017 forecast for the U.K.’s GDP growth. S&P forecast Brexit would lop 1.2 percent off the country’s GDP growth in the next year and 1 percent in 2018. Moody’s Investors Service changed the outlook on Britain’s long-term issuer and debt ratings to negative from stable, saying that the Brexit vote “will herald a prolonged period of uncertainty for the U.K., with negative implications for the country’s medium-term growth outlook.”
Construction: Restrictions on immigration could result in a slowdown in the sector, which needs 130,000 more workers, according to HSBC.
Racism: Incidents of overt racial abuse have risen sharply since the Brexit vote. Many of the attacks have targeted U.K. residents from EU member states in Eastern and Central Europe, i.e. Poland, the Baltic states, etc.
Value-Added Tax: The “substantive body of EU law establishing common rules for VAT across member states” would no longer apply to the U.K. if Brexit becomes reality. But pundits say VAT, which accounts for 17 percent of U.K. government receipts, is unlikely to be abolished. VAT currently stands at 20 percent.
Politics: David Cameron announced his resignation after the Leave vote triumphed. Days later, Nigel Farage stepped down as head of the euroskeptic UK Independence Party (UKIP), saying he had achieved his political ambitions after campaigning in favor of leaving the EU and wanted his life back. Ironically, Farage is still a member of the European Parliament that he frequently disparages.
The opposition Labour Party, meanwhile, is in disarray. Several members of the Labour shadow cabinet stepped down and party leader Jeremy Corbyn faces an ongoing leadership challenge.
Theresa May stepped into the breach to become Britain’s second female prime minister since Margaret Thatcher. “The 59-year-old home secretary’s carefully cultivated image of political dependability and unflappability appears to have made her the right person at the right time as the fallout from the U.K.’s vote to leave the EU smashed possible rivals out of contention,” wrote Gavin Stamp of BBC News.
And Brexit gave the world a new British foreign minister in the form of former London Mayor Boris Johnson, a rather unlikely diplomat (see related sidebar).
— Karin Zeitvogel