Published in Insights, The New Zealand Initiative’s newsletter, 24 June 2016
It is midday New Zealand time, and in Britain they have just started counting the votes of their referendum on EU membership.
Polling day surveys show a narrow lead for the Remain camp. However, the race is tight and it is too close to call at this stage. We will not know the result for another few hours.
So let’s just speculate on the possible consequences of the referendum.
Markets hate uncertainty, and there is going to be plenty of that no matter which side wins.
Even if Britain decides to stay in the EU, it will not be business as usual. Prime Minister David Cameron and his Chancellor George Osborne have torn their Conservative party apart during the campaign. They may not stay in office for much longer. A change at the top of the British government, and maybe even an early general election, could be on the cards.
Should Britain pull out, there is even greater uncertainty about its political and economic future. In this case, both Messrs Cameron and Osborne are highly likely to be kicked out of 10 and 11 Downing St before too long. They just could not credibly negotiate Britain’s exit from the EU having just campaigned to stay in. Nor would their party still follow its failed leaders.
Which again means a change of government and maybe an early general election.
Such political uncertainties aside, there is no need to panic. Not even in case of Brexit. The slogan has to be ‘Keep calm and carry on’.
Even a Brexit vote would not mean that Britain is out of the EU straight away. It would only give the UK government the mandate to inform Brussels of their wish to withdraw. They would not have to do so immediately though. If Prime Minister Cameron had to go, he would most likely leave this task to his successor.
Negotiations would only begin once the EU is officially notified. Under Article 50 of the EU Treaty, these would take at least two years.
Over all this time, nothing would change. Britain would have access to European markets. And they could well retain it depending on the outcome of the negotiations.
So we will watch the count of the referendum with excitement. But let’s keep calm no matter what the result. There is no need to panic either way.