It was certainly a black Friday – not the kind that we are used to after thanksgiving holiday – for the stock markets.
The reason for that was not some economic news but rather political one: Brexit. It was a vote on the referendum whether to remain in European Union or Leave.
Right before the referendum vote, there was feeling that pro-EU forces would prevail but the result was quite opposite: the “leave” vote prevailed by 52-48 margin letting loose a political earthquake of magnitude 10.
The result was clearly seen in the reaction of the stock markets which tumbled across the globe wiping out ‘trillions’ in wealth and investors rushing to the safety of US bonds (which Trump wants to negotiate in order to reduce US debt, if he becomes President, notwithstanding the fact that all US debt is constitutionally guaranteed) and gold.
Before we delve into what happens next, here is a quick and interesting fact about the vote: those belonging to 18-24 age group voted overwhelmingly to remain in the EU but those in the 65+ age group – the older white generation -voted to leave the EU.
This brings forth the glaring contrast between the viewpoints of two groups: The age group 18-24 years exhibited more tolerance, inclusiveness of all cultures and more progressive outlook towards the world – just like the view point held by the youth generation in US.
But those who voted for leaving the EU – a majority of 65+ age group representing a dying generation – exhibited a mindset that is not able to come to terms with the changing society in modern times and wants to cling back to the old times which are crumbling due to technological advances, more tolerant younger generation and globalization of economy. A similar trait is exhibited by the whites in US who are feeling that “their way of life” is under assault.
The foremost question is: now what happens?
First possibility is that many nations in EU would also like to have the referendum like UK.
Denmark had its own referendum last year but it was more towards deciding how much power to give to unelected officials in Brussels.
Dutch leader Geert Wilders – a firebrand Islamophobe – has already called for having similar referendum to decide about Dutch member ship in EU.
Then there is Marine Le Pen – a far right French leader – who is widely popular in France and if she becomes President then France could also see something along the lines of UK referendum. Hungary’s Victor Orban is no friend of EU and has also hinted at the referendum.
If that happens then EU could find itself on the verge of disintegration.
On the other hand, there is likelihood that UK would be just an anomaly. Other member nations would resolve to make EU a more cohesive force but with reforms that would lessen the authoritarian grip of Brussels on the member nations.
David Cameron wanted to leave the painful matter of separation to his successor, but EU leaders like Jean-Claude Juncker, Angela Merkel, and Donald Tusk etc. have called for speedy divorce opining that there is no reason to wait for Cameron’s successor.
Which means EU might decide to make separation for UK as painful as possible – in the areas of trade, immigration etc. – and as an example in order to deter other members who might harbor such notion of referendums.
UK itself could face the negative reaction to the “leave” vote. There is a possibility that businesses could flee to Ireland or other EU countries triggering job losses and plunging the nation into recession causing untold economic damage.
Besides that, the question of Scotland‘s independence could again come up. Scotland has overwhelmingly voted to remain in the EU but England has opted to leave which would open up Scottish independence question.
Scottish Minister Nicola Sturgeon has expressed no confidence in London’s government and hinted that Scottish independence referendum could be in the cards.
If that happens – a very high probability – then by voting to leave the EU, UK may also have set itself up for disintegration.
That would be quite ironic.