Yesterday, the results from the UK’s referendum to leave the European Union came in: Britain has voted to leave. Otherwise known as the “brexit”, Britain’s exit from the EU is a big deal. These videos help break down the highlights.
The video above from political explainer site Vox goes over a few basic points. Notably, this transition will change the way that Britain does business with the rest of Europe and the world. Under the EU, member countries can freely move goods between countries. This resulted in many companies’ European headquarters landing in Britain, where they can control their deals with the whole of Europe. Now, it’s unclear if companies will move their European headquarters somewhere else and maintain only a small presence in the UK, or if they will keep their headquarters where they are and create small offices elsewhere.
There’s also the issue of migration. Under EU rules, citizens in member countries can freely move across national borders to other member countries. This led to a lot of the contention over the EU in the first place. More importantly, they can also work in those countries. Some in the UK do not like this, saying that it allows migrants from poorer countries to take advantage of Britain’s comparatively higher employment rate. This was a key factor leading to the decision to hold the vote.
As an aside, British Prime Minister David Cameron has announced that he will step down as a part of this transition. Cameron was a very strong proponent for remaining in the European Union.
This video from CNN Money breaks down the next logistic steps even further. Yesterday’s referendum only confirms that the UK population wants to leave (by a vote of 51.9 per cent to 48.1 per cent). However, Britain still needs to invoke Article 50 of the Treaty on European Union, which requires that the UK officially notify the EU that it plans to leave.
After that, a two-year process begins to negotiate a trade agreement with the remaining 27 nations in the European Union. The ultimate goal is to keep the UK’s trade routes open, but there’s no knowing how easy that will be. A two-year deadline makes this even harder. If the UK and EU can’t come to an agreement within two years, the EU must either vote unanimously to extend the deadline, or the UK may be kicked out entirely without a proper trade agreement in place.
This video from BBC Newsnight breaks down the effects on British commerce in more detail. The minutia of the trade agreement that the UK must negotiate over the next couple years could have huge ramifications not only for jobs in Britain, but for the world as a whole. The UK is home to some of the largest global banking companies like HSBC and Standard Chartered. The UK’s financial services will have to be renegotiated as part of the new EU trade agreement.
It’s unclear just how much this could affect the worldwide financial system. In terms of finances, the UK has its own counterparts to the likes of Wall Street within its borders. Closing those borders will have long-lasting ramifications that we can’t entirely predict until we know the specifics of this deal that’s yet to be hammered out with the EU.