In a stunning rebuke to the “European project” and their own political class, British voters defied opinion polls and market expectations and chose to leave the European Union by a decisive margin.
The ITV network called the referendum on a British exit – called "Brexit" for short – in favor of "leave" shortly after 4:30 a.m. London time, followed in quick succession by other major British media, on the basis of reported results and analysis of areas where the vote is still being counted.
The result – the first time any member of the 28-nation EU has chosen to leave the union – will have repercussions for both Britain and the EU, and perhaps for the global economy, that are difficult to forecast.
It is a potentially epochal event that could change the face not only of the United Kingdom but of Europe.
In the bitter campaign leading up to Thursday’s referendum, "remain" supporters warned Britain would face an immediate recession and slower economic growth in the longer term. Many experts in and outside Britain suggested that a British exit could lead to an unraveling of the EU as a whole.
The immediate worry was that the British rejection of Europe would embolden nationalist and populist movements in other EU countries to insist on referendums on whether to remain part of the bloc.
Spain will hold new national elections this Sunday after a vote in December split the Spanish Parliament among mainstream parties and insurgent movements which could not agree to form a government.
The upstart Podemos party, which does not advocate leaving the EU but does seek to alleviate the economic restrictions imposed on its members, may gain momentum in the wake of the British vote. Or the new uncertainty may prompt Spanish voters to take a safer route with the mainstream parties.
Right-wing euro-skeptic parties in France, Austria and Germany as well as the populist Five Star Movement in Italy will all seize upon the British result as a reason to loosen their own ties to Brussels.
The British rejection of the EU marks the culmination of growing hostility among the European public to the aloof bureaucracy that closer economic and financial integration has spawned.
It was the EU refugee crisis in the past year in the wake of turmoil in the Middle East that exacerbated that hostility and drove much of the anti-EU sentiment in the British referendum.
In Britain itself, the future of the government led by Prime Minister David Cameron, who called the referendum and campaigned fiercely for the country to remain in the EU, was uncertain.
Member of his Conservative Party, including many who opposed his call to Remain, pledged their support in an apparent effort to avoid further turmoil through a collapse of the government. However, Boris Johnson, Conservative former mayor of London and an outspoken Leave supporter, is waiting in the wings to take over Cameron’s job as leader of the party and prime minister.
Nor was the future certain for the leader of the opposition, Jeremy Corbyn, head of the Labour Party, as members massively ignored the party’s call to vote for Remain.
In Scotland, where "remain" won in every local polling authority, the Scottish National Party may well follow through on its threat to demand a new independence referendum so that Scotland can remain in the EU after the United Kingdom voted to leave.
As early results pointed to a Leave victory, the British pound plummeted some 10% against the dollar in global currency markets and British stocks were expected to plunge as well when markets opened in London.
The impact on the U.S. economy would be less direct, but U.S. companies basing their European operations in Britain could be affected and both the dollar and U.S. stocks could be impacted by the turmoil in global financial markets. The Federal Reserve had cited the impending Brexit vote as a reason to delay any further increase in U.S. interest rates.
Nigel Farage, head of the U.K. Independence Party, who played a major role in forcing Cameron’s hand to call a referendum and who spearheaded the Leave campaign, hailed the vote as an “independence day” for Britain.
The negative market reactions may be of short duration, but volatility is bound to continue as Britain faces two years of bruising negotiations for leaving the EU.
It is likely that neither the direst warnings of the economic consequences of leaving nor the rosiest pictures of how an independent Britain – still the fifth largest economy in the world, after all – will fare in the global economy are accurate.
But as the country moves into uncharted territory, there will be tremendous uncertainty that will dampen investment and cloud economic prospects in the short and medium term.
