It is three days since the EU Referendum was held in UK.
And there have been diverse comments, criticisms, predictions , cartoons and jokes, on the outcome of the poll, which had been dubbed as ‘Brexit’ or “British exit”. It is unlikely, I can see, that this commentary and criticism will subside any time soon.
That Britain would really agree to exit the European Union, that the repercussions on global stock markets would be of this huge magnitude, and that Britain’s Prime Minister David Cameron would actually put in his resignation were probably among the many things that the ‘leave’ voters never anticipated.
The ‘remain’ voters have been defeated, I think, mostly by strong vocal-power than by sound rationale.
In the days leading up to the date of the referendum, 23 June, both sides with strong rhetoric fought with bitter campaigns, and it looks like reason has lost, and rhetoric has won.
Let me quote a few figures to explain why I feel it was not a reasonable verdict by the people of Britain.
Firstly, it was a narrow vote. 48.1% wanted Britain to remain in EU. 51.9% wanted it to leave. So, not a big difference there.
Secondly, interestingly, 75% of the young people aged 18-24, and 56% of those aged 25-49 have all said they had voted “remain” (This is according to a YouGov survey after the voting closed on Thursday). But the aged seem to have voted to “leave”.
So, simple logic tells us that the future of the young was decided by those growing old! Those who would not really bear the brunt of the referendum’s consequences.
Thirdly, shockingly, 62% of Scotland voted to remain in the European Union. And even 55.7% of Northern Ireland voted to remain.
But 53.2% of England and 51.7% of Wales, which I think are flimsy margins, pushed the total “national vote” outcome to ‘leave’!
Needless to say, Scots are already mulling on a second independence referendum.
What were the arguments for the “leave” side? Concerns over immigration and the slow pace of economic recovery.
What were the arguments for the “remain” side? Steadiness, and a status quo, with a hope for a stronger EU.
But, what is done is done. It is a victory for the ‘leave’ campaigners. And to their leaders like Boris Johnson and Nigel Farge.
The question now is, how this will affect the global markets and all of us. What do economists say to this referendum outcome?
Well, if the deep plunges of the stock markets are any indication, it suffices us to say there is huge pessimism.
The fact that the value of the pound slumped to its lowest level in more than 31 years, down to $1.33, shows that Britons will find it hard to send, or spend, the pound abroad.
The ratings agency Moody’s has already cut UK’s credit rating outlook to “negative”! And S&P also warned that UK is likely to lose its AAA credit rating.
How will this Brexit poll result affect GCC countries?
It is evident that when the pound gets weaker, imports from UK to GCC will become cheaper. It will also be favourable for GCC to make real estate investments in UK.
But let us not forget that, sadly, the existing investments in UK, whether capital or real estate, will now depreciate in value rendering all those past strategic plans impractical. If, however, they are long-term strategic portfolio investments, then there is a chance that all is not lost.
Investments aside, there are important lessons that the six countries of GCC can learn from the way the 28 countries of the European Union are being battered by political and economic upheavals.
If this Brexit poll has shown the world anything, it is this. The United Kingdom is actually a divided kingdom. From within itself. And, now, from Europe.