LONDON – Britain voted to leave the
European Union after a bitterly divisive referendum campaign, toppling
the British government, sending global markets plunging Friday and
shattering the stability of a project in continental unity designed half
a century ago to prevent World War III.
The decision launches a yearslong process to
renegotiate trade, business and political links between the United
Kingdom and what will become a 27-nation bloc, an unprecedented divorce
that could take decades to complete.
"The dawn is breaking on an independent United
Kingdom," said Nigel Farage, leader of the U.K. Independence Party. "Let
June 23 go down in our history as our independence day!"
Prime Minister David Cameron, who had led the
campaign to keep Britain in the EU, said he would resign by October when
his Conservative Party holds its annual conference. He said the next
prime minister would decide when to invoke Article 50, which triggers a
departure from European Union.
"I will do everything I can as prime minister to
steady the ship over the coming weeks and months," he said, "but I do
not think it would be right for me to try to be the captain that steers
the country to its next destination."
The electoral commission said 52 percent of voters
opted to leave the EU. Turnout was high: 72 percent of the more than 46
million registered voters went to the polls. Polls ahead of the vote had
shown a close race, but the momentum had increasingly appeared to be on
the "remain" side over the last week.
The result shocked investors, and stock markets
plummeted around the world, with key indexes dropping 10 percent in
Germany and about 8 percent in Japan and Britain.
The pound dropped to its lowest level since 1985,
plunging more than 10 percent from about $1.50 to as low as $1.35 on
concerns that severing ties with the single market will hurt the U.K.
economy and undermine London's position as a global financial center.
The Bank of England pledged to take "all necessary steps" to keep
Britain stable.
The U.K. would be the first major country to leave
the EU, which was born from the ashes of World War II as European
leaders sought to build links and avert future hostility. With no
precedent, the impact on the single market of 500 million people — the
world's largest economy — is unclear.
The president of the European Council, Donald Tusk,
said the bloc will meet without Britain at a summit next week to assess
its future, and Germany's Foreign Ministry said it will host a meeting
Saturday of the top diplomats from the original six founding nations of
the European Union. Tusk vowed not to let the vote derail the European
project.
"What doesn't kill you, makes you stronger," he said.
But already, far-right leaders in France and the Netherlands were calling for a similar anti-EU vote.
The referendum showed Britain to be a sharply divided
nation: Strong pro-EU votes in the economic and cultural powerhouse of
London and semi-autonomous Scotland were countered by sweeping
anti-Establishment sentiment for an exit across the rest of England,
from southern seaside towns to rust-belt former industrial powerhouses
in the north.
"It's a vindication of 1,000 years of British
democracy," commuter Jonathan Campbell James declared at the train
station in Richmond, southwest London. "From Magna Carta all the way
through to now we've had a slow evolution of democracy, and this vote
has vindicated the maturity and depth of the democracy in our country."
Others expressed anger and frustration. Olivia Sangster-Bullers, 24, called the result "absolutely disgusting."
"Good luck to all of us, I say, especially those trying to build a future with our children," she said.
Cameron called the referendum largely to silence
voices to his right, then staked his reputation on keeping Britain in
the EU. Former London Mayor Boris Johnson, who is from the same party,
was the most prominent supporter of the "leave" campaign and now becomes
a leading contender to replace Cameron. The vote also dealt a blow to
the main opposition Labour Party, which threw its weight behind the
"remain" campaign.
"A lot of people's grievances are coming out and we
have got to start listening to them," said deputy Labour Party leader
John McDonnell.
Indeed, the vote constituted a rebellion against the
political and economic establishment. Farage called it "a victory for
ordinary people, against the big banks, big business and big politics."
After winning a majority in Parliament in the last
election, Cameron negotiated a package of reforms that he said would
protect Britain's sovereignty and prevent EU migrants from moving to the
U.K. to claim generous public benefits.
Critics charged that those reforms were hollow,
leaving Britain at the mercy of bureaucrats in Brussels and doing
nothing to stem the tide of European immigrants who have come to the
U.K. since the EU expanded eastward in 2004. The "leave" campaign
accuses the immigrants of taxing Britain's housing market, public
services and employment rolls.
Those concerns were magnified by the refugee crisis
of the past year that saw more than 1 million people from the Middle
East and Africa flood into the EU as the continent's leaders struggled
to come up with a unified response.
Cameron's efforts to find a slogan to counter the
"leave" campaign's emotive "take back control" settled on "Brits don't
quit." But the appeal to a Churchillian bulldog spirit and stoicism
proved too little, too late.
The result triggers a new series of negotiations that
is expected to last two years or more as Britain and the EU search for a
way to separate economies that have become intertwined since the U.K.
joined the bloc on Jan. 1, 1973. Until those talks are completed,
Britain will remain a member of the EU.
Exiting the EU involves taking the unprecedented step
of invoking Article 50 of the EU's governing treaty. While Greenland
left an earlier, more limited version of the bloc in 1985, no country
has ever invoked Article 50, so there is no roadmap for how the process
will work.
Authorities ranging from the International Monetary
Fund to the U.S. Federal Reserve and the Bank of England have warned
that a British exit will reverberate through a world economy that is
only slowly recovering from the global economic crisis.
"It will usher in a lengthy and possibly protracted
period of acute economic uncertainty about the U.K.'s trading
arrangements," said Daniel Vernazza, the U.K. economist at UniCredit.
The European Union is the world's biggest economy and
the U.K.'s most important trading partner, accounting for 45 percent of
exports and 53 percent of imports.
In addition, the complex nature of Britain's
integration with the EU means that breaking up will be hard to do. The
negotiations will go far beyond tariffs, including issues such as
cross-border security, foreign policy cooperation and a common fisheries
policy.
Among the biggest challenges for Britain is
protecting the ability of professionals such as investment managers,
accountants and lawyers to work in the EU.
As long as the U.K. is a member of the bloc, firms
registered in Britain can operate in any other member state without
facing another layer of regulation. It's the same principle that allows
exporters to ship their goods to any EU country free of tariffs.
Now that right is up for negotiation, threatening the
City, as London's financial heart is known, and its position as
Europe's pre-eminent financial center.
Many international banks and brokerages have long
used Britain as the entry point to the EU because of its trusted legal
system and institutions that operate in English, the language of
international finance. Britain's financial services industry is also
surrounded by an ecosystem of expertise — lawyers, accountants and
consultants— that support it.
Some 60 percent of all non-EU firms have their
European headquarters in the U.K., according to TheCityUK, which lobbies
on behalf of the financial industry. The U.K. hosts more headquarters
of non-EU firms than Germany, France, Switzerland and the Netherlands
put together.
"We believe this outcome has serious implications for
the City and many of our clients' businesses with exposure to the U.K.
and the EU," said Malcolm Sweeting, senior partner of the law firm,
Clifford Chance. "We are working alongside our clients to help them as
they anticipate, plan for and manage the challenges the coming political
and trade negotiations will bring."
JPMorgan Chase Chief Executive Jamie Dimon said
earlier this month that a vote to leave would force his bank to move
jobs to mainland Europe to ensure that it could continue to service
clients in the EU. Other global businesses with customers in the rest of
the EU will be in a similar situation.
The only question that remains is whether the dire economic predictions economists made during the campaign will come to pass.
"Uncertainty is bad for business," Vernazza said. "A
sharp fall in U.K. risky asset prices, delays to investment, disruption
to trade, and a loss of business and consumer confidence mean the U.K.
economy is more likely than not to enter a technical recession within
two years."