As you probably know, during the recent referendum held in the United Kingdom on June 23rd, 2016, the people of Great Britain decided to quit the European Union. This is a truly historical event capable of changing the economic and financial situation in Europe. At this point, the British government is busy solving a number of urgent issues, including the EU membership.
Even though the results of the mentioned referendum are officially released, we should keep in mind that the process of quitting the European Union is a rather long process, which will take some time to be completed. For now, the U.K. is still an E.U. member. And the situation is going to remain this way for a couple of years before the process is complete.
Meanwhile, the referendum already triggered some unexpected events. David Cameron said that the British government respects the British people’s decision and is going to put it into practice. At the same time, he promised that those British citizens that live abroad (around 3 million people) are not going to feel any inconvenience in the future.
Also he promised to do his best to stabilize the situation over the next couple of months. Later on, he is going to resign in October 2016. It is expected that the Conservatives will elect a new Prime Minister in September. At the same time, Jeremy Corbin, Leader of the Labor Party, is under pressure. Still, it doesn’t mean that he is going to resign.
As for financial markets, they reacted instantly to the referendum results. For example, FTSE dropped 7,4% at a time instantly after opening the next day. German stock exchanges lost almost 10%. CAC 40 (France) lost over 9% as well. As for the British Pound, the currency instantly dropped down to the lowest level since 1985. The currency lost 10% over a single trading session, but at the end of the trading day it managed to recovered some of the lost ground. This didn’t come as a surprise since everyone was aware of this kind of market reaction in case of the worst-case scenario. A number of international companies are now reconsidering their intensions to invest in Great Britain, which bad news for the British economy and national currency, Masterforex-V Academy reports.
As for the legal procedure of quitting the European Union, it is described in Article 50 of the Treaty of Lisbon signed in 2009. It should be noted that this procedure has never bee put into practice. David Cameron said that his successor would have to decide on the date of starting the Brexit procedure and let the European Council know.
After the European Council is notified, the U.K. will drop out of the process of making crucial economic, political and financial decision in the European Union. It is interesting to note that there is no coming back for the U.K. in case of quitting. There is no such procedure. Experts say that after quitting, the U.K. will be able to re-join the E.U. only if all the members of the E.U. support it unanimously. The Brexit is not an automatic process. The U.K. yet to discuss the conditions wit the the rest of the European Union.
