LATEST: England decides to leave the European Union
(CNN) — Britain has had its fair share of foreign policy fiascoes over the past century: the disastrous decision to seize the Suez Canal from Egypt in 1956, the appeasement of Hitler in the 1930s, and the military strategy in World War I, which destroyed a generation and gave us such synonyms for military misadventure as Gallipoli and the Somme.
“Brexit,” the British vote Thursday to leave the European Union, will surely join this list of disasters.
The EU is the latest of a series of multinational organizations set up after World War II to ensure that there would never again be a pan-European war and to create the conditions for a new European prosperity after the destruction wrought by the war against the Nazis. The EU has admirably succeeded at both.
British voters were deeply split on whether to stay in the EU but in the end voted 52% to 48% to get out.
Just one indicator of the damage Brexit will cause: Consider that the pound has already been pummeled, the British stock market is reeling and global markets have been rocked, including the Dow.
Every serious economist has predicted that Britain will incur significant losses as a result of leaving the EU, including the Organisation for Economic Co-operation and Development, which estimated that British economic growth would be 5% smaller by 2030. But the consequences go far beyond just economic ones.
Because Scotland and Northern Ireland want to remain part of the EU there is the quite real possibility that Scotland and even Northern Ireland might now choose to go their own way on membership within the EU and the “United Kingdom” would suddenly effectively be only England and Wales.
The vote has also deeply divided the ruling Conservative Party. British Prime Minister David Cameron, who blithely promised a vote in 2013 on EU membership, seeming to think that it would be a foregone conclusion to stay, has rightly said he will resign. Many of the key leaders of Cameron’s Conservative Party were on opposite sides of the “Remain” or “Leave” question.
In the wings possibly to succeed Cameron is the flamboyant and opportunistic former mayor of London, Boris Johnson, whose cult of personality and nationalist views suggest a smarter version of Donald Trump.
Trump is himself crowing that Brexit is happening as it serves to reinforce his own anti-immigration stance, which was a central plank of the Leave campaigners in Britain.
The vote has also empowered the British National Party and the UK Independence Party, which are ultra-nationalist parties sustained by a growing suspicion and hatred of immigrants.
And it will also empower other European ultra-nationalists, such as the French National Front party, which is already demanding that France have a vote to leave the EU.
It’s not often that one decision can cripple your own economy, damage global investor confidence, imperil one of the most successful alliances in modern history, foster the rise of ultra-nationalists, precipitate the possible breakup of your own country, deeply divide your own party, cause a great schism between voters of every ideological stripe, but this is one of them.
Well done, David Cameron.
LONDON (CNN) — In a historic vote, the United Kingdom has decided to leave the European Union.
But while the decision is being celebrated by “Leave” campaigners, the 48% who voted to remain are left asking: Why is Brexit such a good idea?
Following the decision, UK Independence Party leader Nigel Farage, who has been at the forefront of campaigning for Brexit, told a group of journalists that the EU is “dying.”
He says the UK has now given itself “the chance to rejoin the world … June 23rd needs to become a national bank holiday and we will call it Independence Day.”
“I was written off as being a lunatic and politically the support for this was absolutely tiny,” Farage told CNN Friday.
“(It was) a little idea that was considered a little kooky, and 17 million voted for it and I couldn’t be happier.”
Boris Johnson, the former mayor of London, hailed the Brexit victory and reassured those who voted to remain that there was no need to panic: “This does not mean that the United Kingdom will be in any way less united, nor indeed does it mean that it will be any less European.”
The UK is ‘better off’ without the EU
While the UK has always had an arm’s-length relationship with the EU since it joined in 1973, the Leave campaign has consistently argued the UK has paid too much to be a part of the Union and that the country is being pressured by rules and regulations set by Brussels.
After the announcement that the Leave campaign won, Johnson reiterated: “There is simply no need in the 21st century to be part of a federal government in Brussels that is imitated nowhere else on Earth. It was a noble idea for its time but it is no longer right for this country.”
While Prime Minister David Cameron fought for a “special status” that exempts the UK from many of the EU laws, Johnson warned in May that the EU was the latest manifestation of a 2,000-year project to unify Europe under a single government.
“Napoleon, Hitler, various people tried this out, and it ends tragically,” Johnson told the Sunday Telegraph.
“The EU is an attempt to do this by different methods.”
Farage said the move will give the UK “greater influence as an independent country … We’ll make our laws in our own parliament, in our own supreme court and control our own borders.”
For those unsure that Brexit is the right decision, Johnson reiterated it wasn’t entirely a goodbye to Europe: “Britain will continue to be a great European power, leading discussions on defense and foreign policy and the work that goes on to make our world safer.”
Goodbye to an open door immigration policy
During the campaign, the Leave supporters focused heavily on immigration. They argued that free movement in the EU meant Britain loses control of its borders.
EU membership allowed citizens from the other 27 countries to move to Britain and look for work without a concrete job offer. “Leave” supporters pointed to immigrants from struggling Eastern European states who were willing to work for low wages in their arguments about getting out of the EU.
“The introduction of the EU passport, whilst a good idea (because) it allows nice people to travel easily around the continent, what it also does is allow bad people to travel freely across the continent,” Farage said.
British Home Secretary Theresa May said free movement in the EU “makes it harder to control immigration.”
Pro-Brexit campaigners have suggested the UK establish an “Australian-style points-based immigration system.”
The idea is that those who have certain skills and qualifications that are worth more to the British economy will gain more “points,” which will help them reach a threshold that allows them to become eligible for a visa.
Whatever the future policy may be, there will be no change for EU citizens already lawfully residing in the country.
“These EU citizens will automatically be granted indefinite leave to remain in the UK and will be treated no less favorably than they are at present,” Vote Leave said.
What happens now?
Going forward, Farage told CNN his party “needs to stay strong to make sure the government actually carries out the wishes of the people.”
“We’re going to watch these negotiations like a hawk,” he said. “We’ve won the vote to become an independent nation, we now need to make sure it actually does happen.”
For those who voted to remain in the EU, he had one message: “Don’t worry.”
“I’d say to them, listen, our trading relationship today is exactly the same as it was yesterday. What we now have is a period of transition which we can get a sensible deal with our European neighbors,” Farage said.
“The exciting thing is we can do more globally and we are going to be better off as a result of this.”
HONG KONG (CNNMoney) — Investors around the world went into crisis mode as British voters chose to leave the European Union in a stunning decision with far-reaching implications.
U.S. stocks followed plunging global markets. The Dow shed over 500 points, while the S&P 500 lost 2.9% and the Nasdaq dropped 3.4%.
The British pound plummeted close to $1.33, its lowest level in more than 30 years, as the results of the referendum became clear. It’s now down around 6% near $1.36. The euro also fell heavily.
Investors are already concerned about cash drying up in global financial markets.
“Britons delivered a bombshell to the markets,” says Chris Gaffney, president at EverBank World Markets, a firm headquartered in Florida. “This is the biggest risk to markets right now — a possible lack of liquidity like we got during the Lehman crisis.”
In the final count, 51.9% voted to leave the union. Many investors had been betting on Brits choosing to stay. The surprise outcome caused immediate political shock waves, prompting Prime Minister David Cameron to announce his resignation.
Jean-Claude Trichet, a former president of the European Central Bank, called the vote “an earthquake.”
Stocks got hammered amid the panicked mood. Shares in London got off to a brutal start before recovering some ground. The FTSE 100 ended the day 3.2% lower. A broad gauge of European blue-chip stocks index sank around 6.7%.
Bank stocks took a particularly heavy hit as multiple lenders across Europe nosedived more than 15%. Central banks in the U.S., U.K. and the eurozone said they were ready to provide support as needed.
After wild swings in Asian trading, Japan’s Nikkei plummeted 7.9%. The Hang Seng in Hong Kong dropped 2.9%. U.S. stock futures are also sharply lower, with the Dow projected to tumble more than 500 points at the open.
“Everybody’s obviously a little bit stunned,” said Andrew Sullivan, managing director of sales trading at Haitong International Securities in Hong Kong. “Equally, I think there have been people who are looking to take advantage of the situation as and where they can.”
Investors turned to safe haven assets like the Japanese yen, which soared against the dollar. Gold jumped over 4%.
“The markets have been betting on ‘remain’ in the past few days, and when the first results came in, that has reversed,” said Vicky Pryce, an economist and former U.K. government official.
Pryce was watching the results come in at the London School of Economics, where the mood was very nervous.
Most of those attending — and most expert economists — wanted the U.K. to remain in the EU. They are worried “Brexit” could hurt the U.K. economy.
“I’ve just seen my salary vaporize,” Luis Garicano, LSE professor of economics and strategy, said as the pound tumbled after the first results were announced.
It was an about turn for global stock markets. On Thursday, investors had been growing increasingly confident that the country would vote to remain a member of the 28-nation bloc. The pound made gains, and U.S. and European stocks rose.
Concerns over Britain potentially choosing to leave the EU have caused turmoil in international markets in recent weeks. The FTSE 100 seesawed violently and the pound was more volatile than even during the 2008-2009 financial crisis.
A record number of voters registered to vote in the referendum. Fierce campaigning has split the country down the middle, with opinion polls ahead of the vote too close to predict the result.
Migration and the the economy dominated the debate.
Campaigners for a British exit (Brexit) say the U.K. can only control immigration if it leaves the EU, which insists on free movement of people across the union. Campaigners for Britain to remain an EU member say walking out of the biggest free trade area in the world would do irreparable damage to the economy.