On Thursday, citizens of the United Kingdom voted by 52 percent in a referendum to leave the European Union.
The referendum vote will not officially legalize the UK to leave the EU until the British government approves the referendum. After the results were finalized, Britain’s Prime Minister David Cameron, who supported the UK remaining in the EU, announced that he would be stepping down.
The British government will make the final decision on whether or not to leave after a new prime minister enters office in October.
According to the referendum’s official site, the vote can cause “years of uncertainty” as trade regulations and agreements are re-evaluated. An earlier analysis by the HM Treasury showed potential for a “year-long recession” within the country, with at least 500,000 jobs lost and a 3.6 percent drop in GDP.
This has left many lingering questions about the future of Britain, the EU and the U.S.
What is Brexit?
“Brexit,” an abbreviation of “Britain” and “Exit,” is the colloquial term for the decision to leave the European Union. “Bremain,” an abbreviation “Britain” and “Remain,” is the term for the opposition group.
Campus political science professor Mark Bevir, director of the Center for British Studies, believes that there is a 60-40 or 50-50 chance that the UK will remain in the EU, as politicians and groups who support the UK staying in the EU may be able to oppose the vote.
Has this happened before?
According to UC Berkeley economics and history professor Jan de Vries, the potential of Britain’s exit from the UK is a unique situation. Although past countries and empires have declared autonomy or dissolved, the situations are not comparable in terms of market size or historical context.
De Vries cites Ireland’s split from the UK and Austria-Hungary’s division as examples, with the smaller size of Ireland’s economy making its declaration of autonomy less impactful and the end of Austria-Hungary resulting from World War I.
“This is not occurring through war,” de Vries said. “It’s more of a deliberate political act as a decision to go in a certain direction.”
Beyond the UK’s own frustration with bureaucracy and sharing the financial burdens of other countries, experts see the arguments behind the voters’ decision to leave the EU as part of a larger trend of anti-globalization and opposition to trade and immigration. The longterm effects of Brexit are unclear, as trade and travel agreements have yet to be finalized.
“I think people feel there’s an elite that does much better than them and are distant,” Bevir said. “A lot of people felt that they were (voting) against an alien elite and wanted to give them a good kicking.”
How will it affect California?
The results of the vote caused the global stock market to fall and currencies to fluctuate. Some campus professors believe that the vote will not deeply affect California and its economy but see possibilities for slightly lower employment for graduates and losses to families that have investments in the stock market.
International students face additional difficulties, as valuations of the U.S. dollar and Japanese yen increase because of fears of instability. Other currencies have depreciated, potentially making it harder for international students to afford tuition and pay for everyday necessities.
“If you’re from Britain, all of a sudden everything in the U.S. has gone up by more than 10 percent,” said campus business administration professor Ross Levine.
Technology companies in the Silicon Valley may also face considerable changes as part of shrinking global markets and new trade regulations. According to campus economics professor Ben Handel, companies with European headquarters in the UK will have increased paperwork costs and lose opportunities for cheap labor even if tariffs and taxes between the UK and European countries remain the same.
What should we expect for the future?
Campus professors remain unsure of the outcomes of the situation, as the British government has yet to take action. They also question what the vote indicates for the U.S. presidential race — especially in light of comparisons between presidential candidate Donald Trump’s campaign and xenophobic sentiments that may lay in “Brexit.”
“(There’s a) strengthening of separatist movements,” Levine said, referencing Trump invoking a strong sense of nationalism within his constituents. “Is this a precursor to Trump winning the election?”
The market’s downturns may or may not last in the long-term, as they are largely based on investors’ general fears and anxieties, according to de Vries. De Vries also sees the new leaderless situation in Britain with Cameron’s departure as difficult and a prolongment of the turmoil.
“Brexit represents a broader reflection of dissatisfaction with globalization and international trade,” Levine said. “This dissatisfaction manifests itself in the politics and policies of the U.S. and other countries.”
Contact Lillian Dong at [email protected].