Turmoil as Britain votes to leave EU

Supporters of the Stronger In campaign reacting to the results of the EU referendum at the Royal Festival Hall in London yesterday. It was a 51.9 per cent vote for Leave against 48.1 per cent for Remain in a poll that saw the highest voter turnout in
Supporters of the Stronger In campaign reacting to the results of the EU referendum at the Royal Festival Hall in London yesterday. It was a 51.9 per cent vote for Leave against 48.1 per cent for Remain in a poll that saw the highest voter turnout in Britain since 1992.PHOTO: EUROPEAN PRESSPHOTO AGENCY
  • An emotional Cameron says he will step down as PM by October
  • Global markets tumble as pound sterling hits 31-year low
  • Asian economies in a flux; Japan worse off due to strong yen
  • Second independence vote 'highly likely' for pro-EU Scotland

Britain is faced with negotiating a tricky exit from the European Union and picking a new leader after the hotly contested referendum on remaining within the EU produced a stunning Leave verdict.

Prime Minister David Cameron, whose decision to call the vote is now regarded as a blunder, announced yesterday that he would quit office by October. He leaves a party and nation badly divided over issues of immigration, identity and the economy.

Asian markets were roiled after the results showed a 51.9 per cent vote for Leave against 48.1 per cent for Remain, defying predictions of pollsters and bookies. The result threatens to unravel the European project and even the United Kingdom, with every voting district in pro-Europe Scotland voting Remain and Northern Ireland also voting decisively to stay. Wales voted to Leave.

"This is Independence Day," said Mr Nigel Farage, leader of the UK Independence Party, who, along with former London mayor Boris Johnson, spearheaded the Leave campaign. "See EU later", crowed the Rupert Murdoch-owned The Sun tabloid, which had vigorously campaigned for Brexit.

 

Asian markets that had ended Thursday trading comforted by predictions of a Remain vote reacted badly to the result with stocks, the pound and euro hammered from the moment Sunderland, a metropolitan borough in north-east England, showed a stunningly pro- Leave result during early counting.

At press time, the pound, which suffered its biggest drop against the greenback since 1985, fell to as low as S$1.80 to the pound in Singapore.

Singapore's Straits Times Index ended 2.09 per cent lower, faring better than Japan's Nikkei 225, which plunged nearly 8 per cent.

 

The bad news for financial markets may not be over. DBS Group chief investment officer Lim Say Boon warned clients of an impending "perfect storm". Nomura's advice was similar: "Expect waves of contagion in Asia." There could be political fallout on Asia as well as groupings like Asean.

People in restive regions like Catalonia, Tibet, Xinjiang, Kashmir and Mindanao could also be inspired by the Brexit.

Mr Cameron said Britain will wait until a new prime minister is in place before triggering exit talks and invoking Article 50 of the Lisbon Treaty. Once Article 50 is invoked, Britain gets two years to negotiate the terms of separation.

European leaders, facing the prospect of six decades of political and economic integration dissolving, reacted with dismay. French President Francois Hollande said the vote "poses a grave test for Europe". German Chancellor Angela Merkel expressed "great regret" and called for a calm and measured response.

"In unsettling ways, the referendum has put the future of Europe, the transatlantic alliance and the international liberal order itself in play, and done little to settle them," said Mr Daniel Twining, director at the German Marshall Fund of the United States.

The Leave camp scored a margin of more than a million votes in a poll that saw the highest voter turnout since 1992.The results made it untenable for Mr Cameron to continue as PM. His voice breaking, he told a press conference the will of the British public would be respected.

"I think it's right that the new prime minister takes the decision about when to trigger Article 50 and start the formal and legal process of leaving the EU," he said.

Unlike Mr Farage, former mayor Johnson, whose campaign ended Mr Cameron's political career, was in a sombre mood yesterday.

Praising Mr Cameron as "one of the most extraordinary politicians of our age" and for keeping his word on the referendum, he said the EU idea was a noble one but "no longer right" for Britain.

"This does not mean that the United Kingdom will be in any way less united, it does not mean it will be any less European," he said.

Britain may now need to prepare for its own dismantling. Scotland is certain to call for a second referendum on staying in the UK, after rejecting one two years ago on promises that Britain will stay in the EU.

"As things stand, Scotland faces the prospect of being taken out of the EU against her will. I regard that as democratically unacceptable," First Minister Nicola Sturgeon told reporters. "I think an independence referendum is now highly likely."

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A version of this article appeared in the print edition of The Straits Times on June 25, 2016, with the headline 'Brexit turmoil'. Print Edition | Subscribe