Brexit: The potential consequences

AFP , Sunday 22 May 2016

David Cameron
Britain Prime Minister David Cameron (Photo : Reuters)

If Britain votes on June 23 to leave the European Union, it would be a political earthquake for the EU. Here are some of the potential knock-on effects of a Brexit:

1 - Prime Minister David Cameron, beaten in the referendum, quits as premier and Conservative Party leader.

Cameron put his authority on the line in calling the referendum then leading the "Remain" campaign. The bookmakers' favourite to replace him is former London mayor and "Leave" figurehead Boris Johnson.

2 - Scottish First Minister Nicola Sturgeon, on the back of what seems a likely majority of Scottish votes to stay in the EU, launches a second referendum on independence. This time Scotland votes to secede from the United Kingdom, fracturing the UK.

3 - Northern Ireland is isolated from its EU land neighbour the Republic of Ireland and cross-border trade plunges.

4 - Two years of complicated exit negotiations begin between London and Brussels, with access to the single market the main bone of contention.

European Commission chief Jean-Claude Juncker has already said Britain would be "a third party, who we won't be bending over backwards for".

5 - Turmoil in the markets and uncertainty in the City of London financial hub leads to a 15-20 percent fall in the pound sterling, inflation at five percent, interest rates up, a hike in the cost of labour, and the growth rate dropping by one to 1.5 percent (source: HSBC). Thousands of jobs in the City are transferred to Frankfurt or Paris.

6 - Immigration from the EU drops drastically, leading to a shortage of workers in the construction and service industries.

7 - Remaining EU countries seek to renegotiate their own relationships with Brussels, and threaten to quit the bloc if they are not granted.

8 - After a difficult transition phase, Britain remains a flexible and dynamic economy, helped by new economic partners and selective immigration.

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