“Brexit” Bang, Empowered By Populist Movement

This rivals the most-publicized breakups of all time. Elizabeth Taylor and Richard Burton. Tom Cruise and Nicole Kidman. Yugoslavia. And now the United Kingdom is breaking apart from the European Union. The biggest, grandest breakup yet. And by far the most costly, with the most implications.

Steve Nicklas
Steve Nicklas
Editor’s note: Contributing columnist, Steve Nicklas, expresses his views and insight on various topics in Marketplace column.

__STEVE’S MARKETPLACE__

This rivals the most-publicized breakups of all time.

Elizabeth Taylor and Richard Burton. Tom Cruise and Nicole Kidman. Yugoslavia.

And now the United Kingdom is breaking apart from the European Union. The biggest, grandest breakup yet. And by far the most costly, with the most implications, according to reports from various sources.

When the British voted by a 51.9 percent majority on Thursday to leave the control of the bureaucratic E.U., they did it with a “Brexit” bang. A bang that few expected. Empowered by a populist movement, Britons decided to withdraw from the 28-nation union and go it on their own. The painstaking process could now take more than two years.

However, there is immediate dissension in the ranks. Within the UK framework, both Scotland and Northern Ireland voted overwhelmingly to remain with the E.U. Most voters in Wales and England, aside from the city of London, opted to leave.

London is the financial capital of the world, outside of New York City. And London houses many of the world’s largest financial firms, and their elaborate trading systems. It stands to reason that the London business district wanted to stay put.

Now, after the emotional vote, comes the difficult part. The UK must initiate the withdraw from the E.U. and then unravel many of the trade pacts, travel arrangements and political ties previously intertwined with the E.U.

It is unlikely that remaining E.U. members will impetuously turn their backs on their fellow countrymen. Especially when you consider that the UK is the fifth-largest economy in the world. So it is important to the world, and to its primary ally, the United States.

At least the UK will not have to adopt a new currency. It is one of the few E.U. members that did not use the Euro currency, instead retaining the British pound. So there will be little transition there.

A motivating factor to the Brexit movement has been the demands from the E.U. to take in thousands of immigrants from Syria and other countries. With this move, Britons have essentially taken back the control of their borders — and who can across.

The E.U. has practiced open borders among its 28 members, allowing freedom of movement. This will likely no longer be the case to and from the island community of Great Britain, surrounded by the North Sea.

In the meantime, the UK government is reportedly in disarray. Prime Minister David Cameron will resign in three months, allowing time for a replacement to be found. Meanwhile, a petition calling for a second referendum has garnered two million signatures.

Threats have been lobbied. The European Central Bank has mentioned that Britain’s financial industry and its 2.2 million workers could lose the right to serve clients within the E.U. And a French foreign minister warned of risks of increased populism if the UK’s departure is delayed. Still others want the breakup to be painful, so as to deter other nations from going this route.

There has already been fallout, like a boulder falling on your head. The British pound tanked in value, European stocks have been ravaged, London’s role as a global financial capital has been questioned, and ratings agency Moody’s downgraded its credit outlook for Britain.

Yet many Britons say they are willing to endure the pain — to escape the grip of the E.U. They contend E.U. bureaucrats are overpaid and wasteful, while they overreach with regulation and have little accountability. And that the E.U., isolated in its headquarters in Brussels, ignores the desires of the people.

Ironically, it was Cameron who gambled with the notion of a referendum — to help win his re-election. But it went badly wrong. Regardless, most pundits feel the UK will remain an important player in NATO and an ally of the U.S.

And its involvement with the E.U. and its neighbors will still be significant, even if it accepts a lesser membership like Norway and Switzerland. One political analyst says Britain will still be interlinked with sticky European problems — like Russia, ISIS and refugees.

Only now the coordination will be more difficult and time-consuming, he says. Britain will be “on the outside rather than having a seat at the table.”