But despite the disbelief and mild outrage voiced by EU leaders in the wake of the UK vote to exit the union, other countries seem to be having second thoughts about their own future membership. Populist rumblings within France, Holland, Austria and Hungary are exhibiting exit sympathies, which bodes the question: “What will happen to the EU if they get their own referenda?”
Marine Le Pen, the far right leader of the French National Front, has vowed to do exactly that should she be triumphant in next year’s elections. Geert Wilders, the leader of the Dutch Freedom party has called for the same, and Norbert Hofer – who only lost the Austrian presidential elections by a tiny margin – has also called for a referendum within the next 12 months. And Hungarian Prime Minister, Viktor Orban, was adamant that “Brussels must hear the voice of the people.”
In total, a future referendum is being discussed in 10 different EU countries, with opposition parties in Portugal, Denmark, Sweden, Finland, Slovakia – and even Italy – demanding the right to at least vote on this issue.
It is safe to say that a lot of this discontent started before the Brexit vote. Large inflows of refugees from the war in Syria have unsettled many. In addition, violent attacks – a few directly related to immigrants, but the vast majority being terrorist attacks or attacks by fundamentalists not linked to recent immigrants – have become a far too common occurrence across Europe (211 terrorist attacks in the EU in 2015, and over 1,000 arrests).
The terrible incidents in Belgium on March 22 this year, the spate of gun-related deaths in Germany (most committed by non-Caucasian Germans or refugees) and the deadly attacks in France, which now seem a part of everyday life. It is an all-too-sad reality that such incidents are likely to be repeated.
Germany has other problems, too. Not only is the country suffering deadly attacks on its citizens – which is stoking the same anti-immigrant fervour as the UK’s Brexit voters – but the German taxpayers will most likely end up playing a major part of the shortfall (circa £2.44 billion) which will arise when the UK finally leaves the EU.
It is not clear at this stage exactly what sort of deal Brussels will negotiate with Britain, but the end result will be certainly be an increased EU contribution from Germany. This will go down like a tonne of bricks with the German voting public. German newspapers are hopefully suggesting that Britain should be offered more than just a simple break-away – perhaps some new form of EU partnership deal – anything to insure that Germany picks up as little as possible of the post-Brexit EU tab.
Politics being what it is, and the fact that every European country is a voting democracy, the “should I stay or should I go” debate provides ample ammunition for every opposition party across Europe. Politicians are now co-opting the Brexit result as an excuse to push for their own country’s EU exit strategy, and much like the UK vote, irrespective of whether they really believe in it or not. To certain politicians, it is an opportunity that they simply cannot pass up, especially when crystal clear divisions among their citizens are there for them to exploit.
Most of these countries will almost certainly hold tight to see what the real effect on Britain will be over the next 12 months, or so. It is still too early to tell, but the fate of Britain will undoubtedly play a major part in others’ actions.
On a global scale, the UK has already seen the pound sterling plummet, and there is a strong likelihood the country will experience a slowdown in the property market – many commercial property funds in the UK have already been suspended because they cannot meet the volume of withdrawals. It is also very likely that foreign direct investment (FDI) will stay weak for some time and that jobs in the city and elsewhere will be lost.
To add to the uncertain outlook – with concrete figures – Nobel Prize-winning economist Paul Krugman (an American, so he really has no skin in this game) has estimated that Britain will “end up about 2 per cent poorer than it would otherwise be, essentially forever.” And the IMF has already downgraded global GDP growth by 0.1% as a result of the referendum. That’s not the UK growth estimate – that is the impact on the global economy, only as a result of this vote.
For the time being, Europe will remain as it is. The EU and the UK will talk about the future role of Britain at least in a trading bloc with Europe and they are likely to reach some kind of accord before the “Article 50 Button” is pressed. But if tensions bubble over on the continent and another domino falls – in the form of a Nexit, Frexit or Oexit – Mr Krugman and the IMF will almost certainly bring us far more pessimistic forecasts for the future of Europe… and the world.
For more information about investing amid the fallout of Brexit, email Phuket Expat Finance at firstname.lastname@example.org