Although the final votes haven’t been counted at the time of this writing, the United Kingdom has voted in a referendum to leave the European Union.
The European Union is a complicated thing. I’ll be damned if I’m summarizing it here at this late hour. You people can use Wikipedia. The very oversimplified summary of it is that it is a kind of sort of United States of Europe, only with less power in the central government, less cohesion, and no united military (among other differences). The British were a part of this union, although they maintained their own currency.
Dissatisfaction with this union has been growing over the years all over Europe (see my article discussing this in a broader context), but finding a uniquely strong foothold in the UK. There are a number of factors that have contributed to this dissatisfaction, but I think Britain’s history of and cultural proclivities towards classical liberalism are what pushed it over the edge. The UK has a reasonably popular minor political party that grew up essentially as a single-issue party with the objective of leaving the EU called the UK Independence Party (UKIP). The party, like others in Europe, is capturing a lot of energy from right-wing populism, but unlike these movements in continental Europe, it as a fairly substantial classical liberal streak to temper it. Although the first past the post system has kept them from making substantial progress in seating representatives in government, the Party is probably one of, if not the most substantial catalysts in effecting a referendum to leave, and the subsequent vote in favor. The rise of the Party essentially forced the Conservative Party (Tories) to agree to a referendum a couple years back. The Conservative Party is divided on the issue, particularly at the leadership level. The other major parties, the Labor and the Liberal Democrats (Lib-Dems) were in opposition to leaving.
The whole processes of the UK withdrawing from the EU is called the Brexit for short (a portmanteau of British exit). Again, a pretty broad topic worth reading about at your leisure. The exit vote does not mean immediate withdrawal. It is merely starting the process of negotiating an exit from the Union, a process which will be immensely complicated, and in theory taking about 2 years to hammer out.
And that’ll be the fun part, what happens next. There’s plenty of speculation, and there will be more to come. The biggest issue economically is what is known as “regime uncertainty“, which basically means businesses and the financial market is going to freak out until it figures out what the government’s going to end up doing. The pound has already plummeted in value (it may go up again, even quickly, though). And the UK is a strong economy, and faith in the economy plays a fairly substantial roll in its success. Given how globally connected markets are, a lot of people are going to feel this and worry alongside the British. But the corollary of that is the British are certainly going to rebound in the long-run. They’re a strong economy, and leaving the EU might mess with things from a certainty and regulatory perspective for a while, but the birthplace of the industrial revolution isn’t going to collapse into oblivion anytime soon.
Along with economic speculation is the political speculation. Britain was a major economic and political power in the EU, and they bailed. The question is going to be if some of the more marginal countries are going to be emboldened, particularly with the growth of Euroskeptic right-wing factions, and take this as a cue to leave themselves, starting a kind of chain reaction. The absence of such a large country will also put a larger burden on countries like Germany and France to manage the Union, the latter of which has a sizable Euroskeptic party in the National Front. And back in the UK, the old Celtic regions of Northern Ireland and Scotland voted largely to remain in the EU, and have their own separatist tendencies. While the Scottish referendum on independence was a “no” vote by a pretty wide margin, the Irish political party Sinn Fein have just called for a referendum on uniting Ireland as an independent nation (which would be a member of the EU).
All sorts of fun stuff to be on the lookout for. Take most of it with a grain of salt, especially while it’s all getting sorted out.