Saturday, June 25, 2016

Europe shocked by Brexit, integration in setback

The Leave camp won Britain's Brexit referendum on Friday morning by obtaining nearly 52 percent of ballots, pulling the country out of the 28-nation European Union (EU) after its 43-year membership.

British Prime Minister David Cameron, who had led the campaign to keep Britain in the EU, said shortly after the results that he would step down by October.

Britain has become the first country to quit in the EU's 60-year history.


"Today is an incisive day for Europe," said German Chancellor Angela Merkel during a press conference in Berlin Friday on the outcome of the Brexit referendum.

It is "with great regret that Germany must now accept the decision of the majority of British population who wish to end membership of the United Kingdom in the EU," said Merkel. However, she warned of "quick and easy conclusions."

"The European Union is strong enough to give the right answers to the present day," she said.

Besides Merkel, leaders from across European capitals all expressed their dismay and surprise on Friday following the "sobering, unexpected" outcome of the Brexit referendum.

French President Francois Hollande said he "respects" the choice of the British. He admitted the Brexit vote signalled difficulties for the EU, especially for the euro.

"I will do everything for us to adopt profound changes rather than a retrogression," he stressed.

Italian Prime Minister Matteo Renzi stressed the country's unchanged commitment to the path of European integration.

"If I have to pick a name for Europe, that name is 'home.' And home is not only a physical space, but a place built up on sentiments and emotions where to feel solid and safe," Renzi said.

In Athens, Greek Prime Minister Alexis Tsipras called for imminent action to change course and rebuild a better EU.

"The decision of the British people is respected, but it confirms a deep political crisis, an identity crisis and a crisis in the European strategy," he said.

Speaking to Xinhua in Vienna, former Austrian Vice-Chancellor Erhard Busek said he doesn't see the British decision as a rational choice.

During a plenary session in Strasbourg, president of the Parliamentary Assembly of the Council of Europe Pedro Agramunt said: "A bit of the European ideal has disappeared today following the British vote in favor of leaving the Union."

  • Countries aspiring to join the EU, such as Albania and FYROM, called Britain's vote "a sad decision for the EU."

Albanian Minister of Integration Klajda Gjosha said: "It is sad for Albanians who aspire to join the EU. Although, as long as the EU project is underway, the process of enlargement will and should continue."

  • FYROM Foreign Affairs Minister Nikola Poposki said: "For Our Country and for the Balkan as a whole it will mean losing a fierce supporter of the EU integration process."

Swiss President Johann Schneider-Ammann warned that Switzerland's economy stands to be affected by the United Kingdom's withdrawal from the EU, with political uncertainties likely to hamper Bern's ongoing negotiations with Brussels.

Though not an EU member state, Switzerland participates in the EU single market as a party to the European Free Trade Association.


Scottish First Minister Nicola Sturgeon said Friday a second independence referendum was "highly likely" after Britain voted to leave the EU.

It was "democratically unacceptable" that Scotland faced the prospect of being taken out of the EU against its will, Sturgeon said at a press conference.

In Thursday's Brexit referendum, the Leave campaign received about 52 percent of the votes, against 48 percent for the Remain side. However, Scotland voted 62 percent in favor of remaining in the EU, with the majority in each council of its 32 local authority areas voting to remain.

The Brexit vote would lead to a "significant and material change" to Britain's constitution, and an option was now "on the table" since many people who voted against Scottish independence in 2014 would be reassessing their decision, said Sturgeon.

The Scottish government would begin preparing legislation to enable another independence vote, she added.


According to the latest predictions of the International Monetary Fund (IMF), Brexit could leave Britain's economy more than 5 percent smaller by 2019 than if it stays in the 28-nation club.

"In the short run, the uncertainty generated by navigating a complicated and untested exit process could be damaging for investment, consumption and employment (in Britain)," the IMF said in its report.

According to research commissioned by employers' group the Confederation of British Industry, a British vote to leave the EU could cost the economy 100 billion pounds (137 billion U.S. dollars) and 950,000 jobs by 2020.

In an op-ed piece written for The Guardian on Monday, billionaire George Soros said that Britain leaving the EU would have disastrous effects on the British economy.

Soros used data from the Bank of England, the Institute for Fiscal Studies and the IMF, which calculated that the long-term economic consequences of Brexit would reduce annual household incomes by between 3,000 pounds and 5,000 pounds (about 4,110 to 6,850 U.S. dollars).

Trade is another tricky issue. Britain's withdraw from the EU's single market is costly as it has to renegotiate trade agreements with the EU member states, 52 economies which enjoy preferential trade agreements with the EU, or with over 100 members of the World Trade Organization.


Brexit is set to create chaos to EU's budget plan as well as the ongoing capital market integration, bringing negative impact to the EU financial institutions and eventually weigh on the bloc's economy, experts say.

Britain is the fourth largest net contributor to the EU's budget, after Germany, France and Italy. This year, it would have to contribute 19.4 billion euros (21.59 billion U.S. dollars) to the EU budget and gain back rebate and custom duties worth 5 billion euros.

Experts said the budget gap caused by Brexit has to be filled by other EU member states, of which Germany is expected to contribute the biggest share.

Brexit means Britain will leave the EU's would-be capital market union, which aims to remove barriers for investors and help mobilize money for infrastructure projects and, most importantly, SMEs.

Brexit is expected to be harmful to the EU's capital market union as Britain has long stood as a significant part of the EU's capital markets.

Meanwhile, experts cautioned that Brexit would as well have negative impact on the bloc's financial institutions.

For instance, the European Investment Bank (EIB), whose capital relies heavily on the bloc's major economic powers, is faced with the reduction of Britain's share which accounts for some 16 percent.

Brexit as well puts the bank's high rating on risk, leaving the bank's bond in a vulnerable position and may drive investors away to look for safer bonds.

Economists warned that Brexit raises great uncertainties on the bloc's growth, which unfortunately is still sluggish.

It was predicted that the growth of EU's gross domestic product may slow to 0.5 to 1.0 percent in 2017, compared with the previous predication of around 1.6 percent.


"Britain's departure may further delay Turkey's accession process," Turkish columnist Serkan Demirtas said. "Brexit would introduce ideas of special relationship between the EU and the non-member countries such as Turkey."

"Britain was a main country of the Trans-Atlantic wing of the EU. Its departure is a strategical loss for Turkey," said Serhat Guvenc, Professor of Kadir Has University.

He added that due to Britain's belonging to Trans-Atnaltic wing of the EU, it has always supported NATO member Turkey's relations with the EU. In the long term, Turkey will lose its supporter inside the EU.

Sait Akman from Turkish Economic Policy Research Foundation recalled negotiations between the EU and Turkey which aims to upgrade current Customs Union agreement and said the process might delay after Britain's departure since the bloc would be busy with its internal problems.


Donald Tusk, President of the European Council, has warned that renegotiating the relationship between Britain and the EU could take up to seven years.

In accordance with EU law, the British government first has to launch a proposal to activate Article 50 of the Lisbon Treaty, which sets out the procedural requirements for a member state to terminate its membership.

Then a "withdrawal agreement" needs to be negotiated on such things as tariffs on British goods and freedom of movement between Britain and the remaining EU member states. Legal withdrawal would mean that EU treaties and their protocols no longer apply to Britain, and EU financial programs would be phased out.

After the signing of a new deal between Britain and the EU, which according to the Lisbon Treaty should be concluded in the course of two years, "every single one of the 27 member states as well as the European parliament would have to approve the overall result. That would take at least five years and, I'm afraid, without any guarantee of success," Tusk told German magazine Bild earlier this month.

The ratification process could be long and painful, Tusk warned. It is predicted that the EU would offer a tough deal to Britain to dissuade others from leaving.


1 comment :

  1. EU referendum: Moody's cut UK's credit outlook to 'negative'...

    The UK has had its credit rating outlook downgraded to "negative" by the ratings agency Moody's after the country voted to leave the EU.

    Moody's said the result would herald "a prolonged period of uncertainty".

    Meanwhile, PM David Cameron is under pressure to speed up "divorce" talks with the EU after Brussels said exit negotiations should start immediately.

    EU head Jean-Claude Juncker said it was "not an amicable divorce", but it was "not a tight love affair anyway".

    Moody's said the referendum result would have "negative implications for the country's medium-term growth outlook", and it lowered the UK's long term issuer and debt ratings to "negative" from "stable"....BBC


Only News

Featured Post

“The U.S. must stop supporting terrorists who are destroying Syria and her people" : US Congresswoman, Tulsi Gabbard

US Congresswoman, Tulsi Gabbard, recently visited Syria, and even met with President Bashar Al-Assad. She also visited the recently libe...

Blog Widget by LinkWithin