FAST FACTS: BREXIT

48 percent voted to Remain, 52 percent voted to Leave

London, Scotland and Northern Ireland voted to Remain

Wales and much of England voted to Leave

What to know about the United Kingdom

The UK is the world's fifth-largest economy (GDP
2.678 in 2013). It is a member of the 53-nation
Commonwealth. It has a permanent seat on the
UN Security Council (with a VETO power) and has a
so called special relationship" with the US. It has
one of the most capable militaries in the world and
possesses nuclear weapons. The UK trades more
outside the EU than it does with the EU (and will
continue to trade with Europe after it leaves the EU) of course under different set of rules and
regulations after it invokes article 50 of the European Treaty (the formal article in the European Union
Treaty which deals with an exit from the union inserted by the Lisbon Treaty in 2007) and a period of
negotiations not exceeding 2 years from the date of invocation. Short-term market volatility will not
hide the fundamental strengths of UKs economy that underpin their position in the G7 and other
groups.
Whats European Union?
The European Union - often known as the EU - is an economic and political partnership involving 28
European countries began after World War Two to foster economic co-operation, with the idea that
countries which trade together are more likely to avoid going to war with each other. It has since grown
to become a "single market" allowing goods and people to move around, basically as if the member
states were one country. It has its own currency, the euro, which is used by 19 of the member countries
(UK excluded maintaining its own currency British Pound). Matter of fact, Brexit would have been much
more difficult if UK was already using the Euro, the question is did the UK see BREXIT coming?

What happened?
Brexit is an abbreviation of "British exit", which refers to the June 23rd, 2016 referendum by British
voters to exit the European Union. The referendum shook global markets, including currencies, causing
the British pound to fall to its lowest level (1.315) against the USD in decades (30 years) since when
world's major economies signed a deal to weaken the dollar in September 1985. Prime Minister David
Cameron, who supported the UK remaining in the EU announced he would step down in October. Brexit
is a political goal that has been pursued by various individuals, advocacy groups, and political parties
since the United Kingdom joined the precursor of the European Union (EU) in 1973. In 1975, a
referendum was held on the country's membership of the European Economic Community (EEC), later
to be known as the EU. The outcome of the vote was approximately 67% in favor of the UK's continued
membership of the EEC.
Supporters of Brexit had based their opinion on a variety of factors from the global competitiveness of
British businesses to concerns about immigration. Britain has already opted out of the EU's monetary
union (meaning that it uses the pound instead of the euro and the Schengen Area (meaning that it does
not share open borders with a number of other European states). "Out" campaigners argue that
Brussels' bureaucracy is a drag on the British economy and that EU laws and regulations are a threat to
British sovereignty. Popular support for Brexit had varied over time, but the June 23rd vote
demonstrated that UK citizens believed that Great Britain can survive without the economic
cooperation, trade agreements and partnerships that benefitted the country for the past several years.
A referendum - a vote in which everyone (or nearly everyone) of voting age can take part - was held on
Thursday 23 June, to decide whether the UK should leave or remain in the European Union, the leave
votes won by 52% to 48%. The referendum turnout was 71.8%, with more than 30 million people
voting. It was the highest turnout in a UK-wide vote since the 1992 general election
Background of UK in the European Union
The UK was not a signatory to the Treaty of Rome which created the EEC in 1957. The country
subsequently applied to join the organization in 1963 and again in 1967, but both applications were
vetoed by the then President of France, Charles de Gaulle, ostensibly because "a number of aspects of
Britain's economy, from working practices to agriculture" [had] "made Britain incompatible with
Europe" and that Britain harbored a deep-seated hostility to any pan-European project.

Once de Gaulle had relinquished the French presidency, the UK made a third application for
membership, which was successful. On 1 January 1973 the United Kingdom joined the EEC, then often
referred to in the UK as the "Common Market"
Economic and Political Implications

The banks on Friday took some of the biggest hits to their share price, following the Brexit vote.
Lloyds Banking Group was down 21%, Royal Bank of Scotland and Barclays by 18%. Standard Life
was down 17% and Aberdeen Asset Management by 11%.

UBS Wealth Management (global financial services company), among others, that the second
half of this year is likely to see no growth at all in the UK economy. It says the fall in sterling will
import inflation, and with stagnation, that puts the UK into "stagflation" (persistent high
inflation combined with high unemployment and stagnant demand in a country's economy)

It also warns that interest rates look likely to face a further cut to zero, and if that still doesn't
work, there may be a need for further money creation (to increase money supply), or
quantitative easing(introduction of new money into the money supply by a central bank)

UKs lower growth means bigger deficit problems than expected. With bigger deficits, there
would be higher debt, and with lower credit rating (ability to fulfill financial commitments,
based on previous dealings). The UK has lost its top AAA credit rating from ratings agency
following the country's Brexit vote. This means the cost of servicing that debt would go up.

Inflation alone takes a higher toll on the poorest. According to the Institute for Public Policy
Research, a 2.3% increase in consumer price inflation after Brexit can be expected to raise costs
for the poorest 10% of households by 3.3%, and the most affluent 10% by 1.6%.

The UK treasury has estimated that being in the EU has a strong positive effect on trade and as a
result the UK's trade would be worse off if it left the EU. New treaties between the UK and the
EU-countries could become more complicated, as the UK will leave the EU regardless of the
negotiations.

Bruce Morley, lecturer in economics at the University of Bath, suggest that the long-term
benefits to the UK of leaving the Union, such as less regulation and more control over Britain's
trade policy, might outweigh the short-term uncertainty observed in the [country risk] scores.

Other Countries to Exit

The populist movement sweeping through Europe will see the Brexit vote as a win, and calls for other
national referendums have already begun. The stability of the EU will be put to its toughest test to date.
EU President Donald Tusk has already called for European nations to shy away from "hysterical
reactions" in the wake of the result. However, skepticism of the EU continues to grow. Here are some of
the candidates for referendums:

France is seen as the first in line for a so-called Frexit. The French National Front (FN) party, lead
by the charismatic and anti-EU politician, Marie Le Pen, hailed the Brexit vote as win for
nationalism and sovereignty across Europe. Like a lot of French people, Im very happy that the
British people held on and made the right choice. What we thought was impossible yesterday
has now become possible, Le Pen Said. She has vowed, if elected French President next year
2017, an EU referendum for France will take place within six months.

Italy might have the biggest support amongst voters when it comes to a potential exit from the
EU. Hours after the Brexit result, Italy's head of the Northern League, Matteo Salvini reiterated
his stance that it was time for Italy to give the people a voice. "This vote was a slap in the face
for all those who say that Europe is their own business and Italians don't have to meddle with
that," Salvini said.

In May, global
research firm
IPSOS released a
report that
showed Italy and
France at the top
of the list of
countries who
believe their
country should
hold a
referendum.

Adam Anthony is a freelance writer and independent Economic/Political analyst. Adam has a
background in Economics (Mzumbe University), Economic Diplomacy (Centre for Foreign Relations) and
International Trade (University of Dar es Salaam). He can be contacted at adam.anthony@live.com