The voters in England and Wales shocked the world on Thursday by voting to take the United Kingdom out of the European Union. They chose to leave the largest economic marketplace in the world (larger than even the United States or China) -- a market where they enjoyed very favorable trade policies with other European countries (and through the E.U., the rest of the world). The vote seems to have been spurred by a virulent anti-immigrant feeling and the fact that only the rich have recovered from the worldwide recession of 2008 (much like here in the U.S.).
They were warned that leaving the E.U. would have serious economic consequences, but either didn't believe those warnings or didn't care. Now they will have to suffer those consequences. The British pound has dropped precipitously, as has their stock market. Since the U.K. depends on imports a great deal, the devalued pound will make all imports cost citizens more money (and that includes basics like food). The lower financial markets will affect their economy as a whole, causing it to falter even worse that it already was -- and most of the negative effect of that will be felt by middle and lower class citizens.
Some on the side of leaving the E.U. say these effects will be felt in the short-term only. I tend to disagree. It will take a couple of years for the U.K. to disengage itself from the E.U., and no one knows what kind of agreements on trade and other things will be reached -- and financial markets don't like not knowing the future.
Some think the U.K. will wind up with the same kind of good trade agreements with the other European nations in the final analysis. That's unlikely. The E.U. is going to want to punish the U.K. for leaving to prevent other nations from doing the same thing -- and the easiest way to do that is through trade agreements.
Leaving the E.U. could also have political ramifications within the United Kingdom. While both political parties (Conservative and Labor) were split right down the middle on the issue of leaving, the Conservatives are currently in power -- and they are the ones that will be blamed for lost jobs, higher prices, and a slower economy in general. The economic suffering could easily last until the next election -- and could even hasten that election. It could easily mean the Conservatives will be voted out of power.
It could also result in Scotland leaving the United Kingdom. The Scots voted recently to stay within the U.K., but that was on the understanding that the U.K. would be remaining in the European Union. Scotland voted heavily to stay in the E.U. last Thursday, and they are very unhappy that England and Wales are now going to take them out of the E.U. Scottish leaders are already calling for a new referendum on leaving the U.K., and it just might pass this time.
The English and Welsh voters have shot themselves in the foot with this vote -- maybe both feet.
