Whilst, personally, I sincerely hope not, what would happen if the UK voted in June to leave the EU? My best guess is that we would stay in. Instinct tells me that, in the event of an out vote, we would take the Danish path, or the Irish path, and keeping asking the question until we got the right answer, which would be to stay, albeit on different terms.
The day after the out vote, financial markets would weaken. Sterling and sterling assets would fall sharply for fear of the uncertainty ahead. The Euro would weaken too. The poor Swiss franc would again see inflows, so too the USD and perhaps the Yen. Gold goes up. It is possible, given the febrile state of markets at the moment, that it would trigger a global risk sell-off and engender the global recession that we all fear. Regardless, we would start to hear announcements of assets, businesses, people and investment leaving the UK.
David Cameron would surely have to go, as too George Osbourne. The leadership election would be about what to do about Europe. A new leader, perhaps drawn from Theresa May, Sajid Javid and Boris Johnson, would start their first day as PM with briefings from ministers, civil service department heads and legal advisers laying out the extraordinary complexity of leaving the EU and the time it would take to negotiate. It would tarnish everything between their arrival and the next election date in 2020. Don’t forget the damage done to the Tories by Black Wednesday.
Around the UK, Scotland, and possibly Wales, would bemoan English voters having forced them into a constitutional change for which they had not voted. Calls for independence would return and in loud voice.
In the meantime, fellow European leaders would digest the consequences of having lost the game of chicken. There would be the immediate financial market consequences. There would the impending awfulness of the divorce negotiations. There would the loss of the UK; its economic weight, its budget contributions, its largest in the Union defence budget, the link to the Anglo-Saxon world, London etc. And, most profoundly, it would burst the dream, represent the high water mark of expansion and provide ammunition for other leavers. They would want the problem to go away.
And don’t think the Americans have any interest in this. Of all the things to be dealt with in the world – China, North Korea, Iran, Syria, Russia etc – and the Brits have to go and light a fire in our own tent. What were they thinking? The White House will publicly support whatever the British people decide but advise caution and careful reflection, and, in private, lobby and manoeuvre for a compromise.
So, I think the new Prime Minister stands up and tells the British people that he/she has heard them, “je vous ai compris”, and their message that they do not want to belong the EU on the current terms, and that he/she intends to set off forthwith to Brussels to negotiate a deal that the British people can accept. European leaders with sombre faces meet him/her professing to do what it takes in order to keep the Union together.
By 2017, the UK will be part of the Union with its own special name for its membership status, some new powers and a lot of bad feeling.
The Oblique View 