WORLD

Britain's Brexit Battle To Reverberate Around The World

Either way it goes, there'll be repercussions.

19/06/2016 6:06 AM AEST | Updated July 15, 2016 12:54
Toby Melville / Reuters
Britain will head to the polls next week to decide whether to stay in the European Union.

Australia will feel the effects of next week's referendum over whether Britain should leave the European Union.

To outside observers, the debate over leaving the EU -- dubbed Brexit -- has moved from high farce to deadly seriousness this week, following Friday's shooting murder of British Labor MP and Remain supporter Jo Cox.

The MP's murder -- whose death sent shockwaves across western democracies -- caused a temporary halt in Britain's Brexit campaign, while global central banks have spent the past 24 hours sounding the alarm as exit jitters grow.

Neil Hall / Reuters
A Brexit supporter holds a Union Flag at a Vote Leave rally in London, Britain on June 4, 2016. Polls suggest that a week from the vote, the Leave Campaign is ahead.

With recent polls showing the leave campaign is ahead, the tremors have already been felt in financial markets — with global shares sliding earlier this week, while US Federal Reserve chair Janet Yellin recently acknowledging the upcoming vote influenced the Fed's decision to keep interest rates on hold this month, and a decision to leave could have implications for the US.

If the vote to Leave is successful, the British government has warned of a "decade of uncertainty" as it tries to extract itself from Brussels and negotiate new trade deals.

Leave says an EU-UK free trade deal will be possible by May 2020.

A decision to leave will reverberate to Australia, said Sydney University's Head of the School of Social and Political Sciences, Professor Simon Tormey.

He told The Huffington Post Australia a successful Brexit vote will have ramifications for individual Australians, businesses and will also impact the globe.​

Australian businesses -- such as BHP Billiton -- have headquartered themselves in the UK, while others rely on the union for its ease of travel and trade links.

"And they do that because of ease of access into the European union, ease of access into a market of 400 million citizens, but also because of the common language it's very easy for Australians to go and work in London and for Londoners to come here," he said.

"If you're BHP you want to be where the action is, and the action is not on an island with 60 million people, it's on the continent with 400 million people.

"So what we might find is there is real damage done in terms of the behaviour of individual corporations and decisions about where they are going to base people."

POOL New / Reuters
Under Pressure? Britain's Prime Minister, David Cameron, pictured at a press conference on the European Union Referendum, in London, last week. A vote to leave could spur calls for his resignation, with many Tory MPs supporting a Brexit.

It's a strain of thought Prime Minister Malcolm Turnbull tapped in to this week, injecting the debate into his campaign for reelection by telling voters the uncertainty created by Britain leaving the EU required a steady hand on the local economy.

Treasurer Scott Morrison on Friday urged investors to keep a cool head.

"As a government we will keep our heads on this issue [Brexit] and I know the smart investors, smart players will be keeping their heads too, and not jumping at shadows, but just proceeding methodically and calmly to consider the potential implications of these things," he said.

But Tormey argues the effects of a Brexit vote on geo-politics are incalculable.

Tormey sees repercussions for Britain coming from Scotland, Wales and Northern Ireland, who he said would likely vote to remain in the EU and it's economic and political union of 27 member states which currently covers about 7 per cent of the global population.

The potential for damage is in the numbers, with a recent report from Bloomberg finding that 8 percent of Ireland's economy depends on trade with the U.K., followed by 7 percent of the Belgian economy and 6 percent of the Dutch economy.

The Czech Republic and Germany are also among the biggest potential losers, with 4 percent and 3 percent of their economy reliant on exports to the UK.

"There is going to pressure on the UK itself. There's a danger here. You might find a real catalytic moment there, with some secessionist grains," Tormey said.

"If Brexit goes ahead — and my betting is it will be successful — there's real risk for the European union itself."

Nigel Farage/Twitter
UKIP leader Nigel Farage faced criticism for using refugees fleeing war in Ukip Brexit poster

Part of the Leave campaign is the idea that Britain will be able to form tighter ties with other Commonwealth countries, and allow Britain to negotiate better trade deals with the rest of Europe.

It is not a realistic prospect, said Dr Michael Fullilove, Executive Director of the Lowy Institute.

Writing in the Australian Financial Review, he said a vote to leave the European Union will weaken links between Western countries and make for a less liberal Europe and a less united West "at a time when the world needs Europe and the West more than ever."

He also argued the UK would be left weaker, poorer, less influential and less respected.

"It would do violence to a liberal international order that is already shaky. It would be welcomed by the West's adversaries in Moscow and elsewhere," he said.

"The Brits must make their own decisions about their country's future. But no one who votes for the UK to leave Europe should believe that in so doing they will win the gratitude of Australians or others in the Anglosphere."

Earlier in the week, UK Chancellor George Osborne said leaving the EU would force him to stage an emergency Budget to fill a £30bn "black hole", a move that has been dubbed "project fear" and the "punishment budget" in the UK press.

It has caused a split in the ruling conservative party, and some have argued a vote to leave could see British Prime Minister David Cameron and much of his front bench resign, while others have argued he could survive.

The referendum is seen as Cameron's mess, after he struck a deal in February to redraw the terms of the UK's EU membership -- a move that failed to convince Leave supporters.

It is also anticipated the British pound will drop in the immediate aftermath, a prospect that doesn't frighten United Kingdom Independence Party leader and prominent Leave campaigner Nigel Farage.

"Even if sterling were to fall a few percentage points after Brexit, so what? The point is we have a floating currency and it will be good for exports," he said earlier this week.

A Netherlands Newspaper in an open an editorial letter to Britain this week said an EU without Britain would be bitter, like "tea without milk."

Bitter is an apt term, with Sydney University's Professor Tormey arguing a Leave vote will spur on anti-EU populists in countries such as France and the Netherlands, who will head to their own elections in 2017.

It could also have ramifications for the United Kingdom, with former Scottish First Minister Alex Salmond arguing Scotland will end up staying in the EU regardless.

"If people are worried about the risk of leaving, then the anxiety for Scotland is much less because either way Scotland is going to end up staying in Europe," Salmond told Bloomberg in an interview in Singapore on Friday.

Former Prime Minister Gordon Brown issued an impassioned plea to remain, invoking the chaotic and violent Europe of World War II while defending Britain's historic role in securing peace, advancing democracy and the rule of law in Europe.

"The Europe that we are creating is not simply a market place, it is a community where every single worker has rights to holiday pay, a maximum working week, so that the good employer cannot be undercut by the bad and the bad by the worst in a race to the bottom," he said.

"We shouldn't just be a member of the European union. We should be a leader of the European union.

"What message would we send to the rest of the world if we the British people — the most internationally minded of all — were to walk away from our neighbours."

The UK votes the Brexit on June 23.

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