The world awoke several weeks ago to a shocking turn of events. With a decisive margin, the United Kingdom has voted to leave the European Union and in the wake of that decision UK Prime Minister David Cameron has announced his intention to resign and leave office within the next few months. The past few weeks in the UK prior the vote have been marked by increasingly hostile campaigns as the polls showed an almost even split between the leave and remain camps, with each side resulting to ideological arguments and accusations of scare mongering to swing the vote their way. In the end, with record high voter turnout throughout the UK, the leave side won the day with a margin of 52% to the remain side's 48%.
A statement that the EU issued reads: "We stand ready to launch negotiations swiftly with the United Kingdom regarding the terms and conditions of its withdrawal from the European Union". Although the EU has signaled their intention to move quickly to try and quell uncertainty in the markets, the process will not happen overnight. The UK represents a significant portion of trade within the single market and the EU economy as a whole, and the exit process will need a considerable amount of thought and foresight at a time when emotions are high. Current estimates are that it will take two years or more for negotiations to complete. There is no historical precedent for a political move of this nature, and it is not unreasonable to state that with the exit of one of its largest economies the future of the EU itself can be called into question.
There is rampant speculation of what the Brexit means in the short, medium and long-term. The exit of the United Kingdom could bring momentum to anti-EU sentiment in other countries, giving rise to a Frexit, Italexit, Swexit? As of now that is not likely, but it is a possibility that cannot be excluded. Once the door for an exit is open, with a high-profile Brexit leading the way, then others might follow or at the very least attempt to negotiate a different kind of membership that backs away from the increased centralization that arose in the efforts to fortify the Euro.
The immediate aftermath of the leave decision in Britain is how to unite a divided country; with the resignation of the Prime Minister and a sharply divided country, the UK will need to work to if not bridge the divide at least instill confidence in the wake of great uncertainty. David Cameron's statement that he intends to hold off on invoking Article 50 and begin the exit nominations in October is not going to sit well with those who voted to leave, who will want more immediate action.
Negative short-term economic implications seem to be a given for the UK, but should not affect our state. Over the years Louisiana companies have build a strong business reputation and bond to the UK, and its companies who are one of our largest foreign direct investors. Said this, EU exit negotiations will determine how strategically important certain investments might be for UK companies in the US and vice versa.
As has been widely reported, global markets suffered in immediate downturn in the wake of the Brexit news. The European Central Bank has said they are ready to intervene to steady the markets. Similar statements have been issued by US Treasury Secretary Jack Lew and the central banks of Japan and Switzerland.
The EU on the other side wants to negotiate a quick exit with Britain as well as realizes that they have to focus more on its current members with goal to hold the European Union together. Therefore we believe that we will see more co-operations on the EU side, as for example a closer defense integration, a proposal that is already on the table done by Ms. Mogherini, EU Representative for Foreign Affairs. This is very important as other EU Countries could follow Britain's example and elections are on its way. The Dutch vote in March next year, France in April and Germany in August. Only time will tell.
Next year marks the European union's sixtieth anniversary of the signing of the Treaty of Rome, the EU founding, what will it bring? We feel strongly that the European Union will stay strong as it has in the past, but realize that Brexit is a big scar that will remain.