Friday, June 24, 2016
A Quick In-and-Out Referendum
Yesterday the citizens of the UK voted, in what is widely considered a referendum that wasn't really even needed, to leave the European Union. While the EU leadership in Brussels has never been accused of efficiency nor having exceptional long-range vision, this is quite a move. Some in the UK are extolling the virtues of not having to deal with "immagrints" [sic] while others are applauding the opportunity for self-determination. Those of us in the USA can appreciate the self-determination aspect, after all we had our own "exit" referendum back in 1776.
The significantly shortsighted aspect that I see in all of this is that the UK has not removed themselves from the trade regulations of the EU, they've only abandoned any opportunity to make changes to the trade regulations from within. If they want to sell anything to the EU they'll have to follow the EU regulations, it's that simple. Yes, the UK has been paying a significant amount to the EU as a participant, but the monies paid in have opened up markets and returned dividends over time. Immigration isn't likely to change a significant amount, as England has such deep roots all over the globe due to their prolific historic colonization activities. The immigrants that have been coming in from other EU countries have largely been skilled laborers, not pond-scum looking to survive on government benefits.
For now we watch the financial markets reel from the shock and work to dampen out the volatility created over the past 24 hours. Personally, I have my fingers crossed that the GBP doesn't recover too quickly as I've got some upcoming financial obligations to cover in England and would at least like to enjoy an advantageous exchange rate if I am able.
It will take at least two years after the UK formally notifies the EU that they intend to exit. It could be months before they issue that official notification. Over that two year period negotiations will take place as to how the UK will interact with the EU after the exit. Those terms will be largely determined by the EU members without the input of the UK. Furthermore, should two years not be long enough, the negotiating period can be lengthened by a vote of the EU members.
It's not going to be a quick fix, and I'd wager that a new referendum in a year's time would produce different results now that people in the UK have some level of understanding as to what it is they actually voted on yesterday.