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Five possible knock-on effects of Brexit?

Illustration picture of postal ballot papers June 1, 2016 ahead of the June 23 BREXIT referendum when voters will decide whether Britain will remain in the European Union. Photograph: (Reuters)

AFP Britain Jun 21, 2016, 06.31 AM (IST)
In the run upto EU referedum slated for Thursday and likelihood of Brexit, speculations are rife that leaving the European Union would be a shock for the EU and the global economy. 

Some analysts warn of a potential "disintegration" of the EU as remaining countries seek to renegotiate their own relationships with Brussels.

Last week, Germany's Foreign Minister Frank-Walter Steinmeier stressed, "It would be a shock for the EU that would require mutual assurances that the EU continues to stick together and that a very successful decades-long process of integration doesn't in the end turn into disintegration."

Here are some of the possible knock-on effects of a British departure from the European Union, or Brexit:

‘Cameron wouldn’t last’: Conservative veteran Kenneth Clarke has warned that Cameron "wouldn't last 30 seconds" if Britons vote to leave the EU.

The bookmakers' favourite to replace him is believed to be former London mayor Boris Johnson, the "Leave" camp figurehead.

Second referendum in Scotland: Following the British exit from the EU, Scottish First Minister Nicola Sturgeon may launch a second referendum on independence.

This time, Scotland would possibly vote to secede from the United Kingdom, fracturing the UK. Further, Northern Ireland would also be isolated from its EU land neighbour, the Republic of Ireland, and cross-border trade could plunge.

Former British prime ministers John Major and Tony Blair said it would be "difficult if not impossible" to maintain a free-travel area between the neighbours.

The two men, who were key players in bringing an end to sectarian violence in Northern Ireland, also warned that Brexit could put the peace process at risk.

Exit negotiations between London and Brussels: An onset of complicated exit negotiations may begin between London and Brussels, with access to the single market the main bone of contention.

European Commission chief Jean-Claude Juncker has already said Britain would be "a third party, who we won't be bending over backwards for."

More so, WTO Director General Roberto Azevedo said the process could take up to 10 years, and that it "could take quite some time before the UK got back to a similar position that it has today," given its weak negotiating position.

Recession risk? Turmoil in the markets and uncertainty in the city of London financial hub could lead to a 15-20 percent fall in the pound sterling, inflation at five percent, higher interest rates, a hike in the cost of labour, and the growth rate slowing by 1.0 to 1.5 percent, according to HSBC analysts.

Also, observers are of the view that thousands of jobs in the city could be transferred to Frankfurt or Paris, top companies have warned.

The Brexit camp argues that the business world would adapt quickly with Britain remaining a flexible and dynamic economy, helped by new economic partners and selective immigration.

Although most economic institutions predict long-term pain for post-Brexit Britain, research consultancy Capital Economics said that it would "not spell disaster" indefinitely for the country's valuable financial sector, highlighting Britain's legal system, language, time-zone and large pool of skilled labour as "intrinsic advantages."

Drop in Immigration: Immigration from the EU is likely to drop drastically, leading to a shortage of workers in the construction and service industries.

A win for Brexit in the referendum -- seen by many voters as a proxy poll on immigration -- would increase pressure on the government to impose tough caps on new arrivals. Immigration consistently tops polls of the most important issues for British voters.









 
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