If the UK leaves the EU the impact would depend on the new relationship between the UK and the EU.

We consider five models. Those at the extremes in terms of proximity to the EU are unlikely. The Norwegian
model, involving membership of the European Economic Area, would not give the UK the political
flexibility required to justify Brexit. By contrast, a much looser model in which the UK trades with the EU
on a most-favoured nation basis would give flexibility, but seriously jeopardise trade and investment. The
most likely models are either a Swiss-style series of bilateral accords governing access to specific sectors of
the single market or a comprehensive FTA. Either would require prolonged negotiation followed by
compromises and still impose sizeable costs. A lack of clarity over what would replace EU membership is
just one reason why the path to Brexit - and beyond - would be long and uncertain, taking ten years or more.
The impact of Brexit through the trade and investment channels would be most severe in the UK.
Regulatory divergence would increase over time, affecting trade volumes and reducing the attractiveness of
the UK for investment. This would impact on European businesses invested or trading in
the UK and supply chains involving UK firms, but the magnitude depends on the specific Brexit model and
is impossible to predict.
The rest of the EU would also feel the impact through several other channels. The EU would lose an
influential, liberalising member, shifting the balance of power in the European Council. It would become
harder to block illiberal measures. Moreover, there would likely be a new regulatory dynamic with the UK
outside the EU. The UK may seek to undercut the EU on standards impacting on the business environment;
but this in turn may create a healthy regulatory competition by putting pressure on the EU from the outside to
be more liberal in its policies.
There is little prospect of London being dislodged as Europes leading international financial centre.
This is sustained by inherent advantages and a large network of financial and professional services that are
hard to replicate. However, existing EU regulations would make it harder for London to serve European
markets, particularly (but not only) for retail banking and euro trading. Some business would be likely to
move to Eurozone financial centres or be lost to Europe. Competition to take this business would be
wasteful. While one or two centres may ultimately benefit, businesses and households across the EU would
bear the cost in terms of higher charges and poorer products.
Brexit would impact on the position of both the UK and the EU in the world. In economic terms this
would be most evident in trade policy. While the UK would likely be free to strike new trade deals based on
domestic priorities it would have less leverage and be a lower priority than the EU for other countries. The
UK would also face the huge challenge of renegotiating the
existing EU deals that would no longer apply. The EU would likewise be a less attractive partner at a time
when it is only second priority for the US and Japan and a lower priority for many emerging countries. The
EU may, however, be able to take a tougher stance in negotiations without the UK and make more active use
of trade remedies. In addition, the EU would lose substantial hard and soft power assets although Brexit
could lead to greater EU political integration and more coherent external representation in institutions and on
external policy.
The overall macroeconomic impact of Brexit is hard to quantify. This is because there are several
unknowns and macro models do not capture many channels through which Brexit would impact on the
economy. The majority of published studies find the impact on the UK would be negative and significant.
The impact on the rest of the EU would be smaller, although no comprehensive macroeconomic estimate has
been published.
There are three broader ways in which the UK and the rest of the EU would be affected by Brexit,
which are not captured by macroeconomic models. The first channel is uncertainty. Surveys find many
UK businesses are already worried about the impact of referendum uncertainty. Yet the process beyond a
referendum - if the UK votes to leave - to the point of exit and then the establishment of a new stable
relationship with the EU would itself be prolonged and highly uncertain.
The second way is through the political dynamic between large states in an EU without the UK. The
UKs influence in the EU has been damaged both by the ambivalence of the UK government to the EU and
by being outside the Eurozone. Even
so, the UK remains one of the most influential member states. Brexit would change the relationship between
other large states including, most importantly, France and Germany. It could bind them together; it could
cement Frances position behind Germany in terms of influence; or it could push them apart, with the UK no
longer providing political cover to mask their differences.

The third way is through political contagion. Some of the tensions in the UK regarding the EU also exist
in other states, even if they manifest themselves differently and to different extents. If the UK leaves, adopts
a more independent policy in sensitive areas, and is seen to succeed, this could have far-reaching political
ramifications for the rest of Europe. The proof of concept of leaving the EU could liberate disintegrative,
centrifugal forces elsewhere.
Why do they want the UK to leave?
They believe Britain is being held back by the EU, which they say imposes too many rules on business and
charges billions of pounds a year in membership fees for little in return. They also want Britain to take back
full control of its borders and reduce the number of people coming here to live and/or work.
One of the main principles of EU membership is free movement, which means you do not need to get a
visa to go and live in another EU country. They also object to the idea of ever closer union and what they
see as moves towards the creation of a United States of Europe.
Brexit was also caused because the purpose the EU was set up for is no longer being used to full potential,
and instead there is an abuse of power by countries such as Germany and France. The point of the EU was to
allow free trade, international criminal law (chasing terrorists who flee abroad and all that stuff) and to allow
countries to assist one another in areas such as medicine (in the development of drugs) and engineering
(creating prototypes and similar).
They are not being racist, they are being protective of their home
What actually went wrong?
UK has been one of a prominent member of the EU. It is the second contributor after Germany(20%) to the
EUs GDP giving in every fiscal a 17% of contribution. France 14%. Italy 11%. UK has always been so open
among the other countries. Liberalization was at its peak, but however to majority Of Britishers such
liberalization seemed a harm to the nation. Issues ranging from job to immigration to education made them
worried. So, as a result they decided to move out of the union.
The global impact;
As discussed earlier UK has been a very open country to the other countries across the globe. It has
significant business and trade connections all over the world. It has gathered so much of strengths with its
association with the EU over the past decades, which it held a strong grip on the world economy. After the
exit it now can be said the nation now holds a lesser grip than before. This may likely cause a degeneration
of the trust worthiness among the global traders towards the nation.
Further a web of strict rules and regulation is foreseen ultimately causing the business houses face a
numerous difficulties and problems whilst their operation in the country.
Exporting to UK and importing to UK will now not be a piece of cake. Stringent policies and strict
regulations are now awaiting the roads.
The movement of goods within the EU countries will be challenging now. Moving goods to France,
Germany, Sweden and other countries of the union and to UK will now have to face various hurdles. Not
only this, the well-established and sophisticated nexus of the bureaucrats, business leaders and related parties
of the countries among the EU now has been disturbed, resulting less quantum of trade and business
practices, henceforth will likely lessen the interest of the investors in carrying business with UK.
Now the sequence doesnt ceases here. The less interested investors will now try to pull out their money
from the country. This will in due course invite a reduction of the job opportunities in UK. And reduction in
the quality and quantity of goods and services so produced. So, less jobs, less production of goods. Less
production of goods, less GDP. Less GDP, weaker English economy.
Now, about the effects on various countries in the EU:

Many countries in the EU have vocal far right parties that are Eurosceptic and Islamophobic. As
They have already seen, there is a rise in racism, intolerance, etc. against immigrants in various
countries, especially the UK.

France: France has signed the LToucqet Treaty with UK. This allows for French customs offices in
Dover and British ones in Calais. This has caused a large build up of refugees outside Calais hoping
to get in to the UK. With the UK exiting the EU, this treaty may be scrapped.

Germany: Given Germanys political weight and its status as a founder member in the EU,
Germany must take the lead when it comes to damage control to prevent other countries from fleeing

the union and maintaining the status quo in the region. The UK is Germanys 3rd largest export
market. This relationship is likely to take a hit as the DAX (Germanys market index) has shown.
However this may just be due to the Brexit shock and may not be a sign of German vulnerability.

Netherlands: With the loss of the UK, many MNCs may shift regional Headquarters to Amsterdam.
This will certainly increase jobs, trade for the Dutch. The Dutch Government also has to deal with
Geert Wilders (Head of the Dutch far right party) increasing popularity.

The Nordics: The Nordic countries have looked toward their former colony for leadership and help
since before WW2. Norway has a pretty sweet deal with the EU that gives it economic benefits
without much political hassle and hence is less likely to be concerned. The same cannot be said
about Denmark and Sweden
Britains economy is mostly based on services and is a large market for exports. Other countries will have to
step up and start growing quickly to fill the void. If countries like Greece keeps under-performing, they may
be asked to quit the EU or follow rules set by economic powerhouses like Germany.
A large number of Britains workforce is from Poland, Latvia, India, Pakistan, etc. They may be asked to go
home. About 3.5 million Brits are employed due to EU trade. A large number of these would lose their jobs.
Education in the UK is likely to get cheaper with the fall in the pound. However, it may be more difficult to
get a visa to study in the UK.
Asia:
Many major Asian powers have been using the UK as their point of entry into the EU. They will now have to
reconsider their foreign policy regarding UK and EU.
Britain will be forced to deepen links with Asian trading partners and cut new deals allowing access to each
others markets. Such a move will throw up opportunities for the likes of China, Japan and Hong Kong who
already have the strongest investment, financial, tourist and trading ties to the U.K. according to a score card
by Bloomberg Intelligence economists Fielding Chen and Tom Orlik.
Economies around the world:

The UK is now leaving a free market of about 500 million people (provided the divorce is absolute).
It will now look for strategic, trade partners around the world. Countries that had trade partnerships
with the EU will now have to form a separate one with the UK. India, China and other members of
the BRICS are likely to benefit from such a partnership.

This is a period of instability for the world. The international gold price, the dollar, etc. have hiked.
Many players are likely to benefit from it.

For a NATO member country: The UK is a country which makes major military expenditure after
the US. Without it, the EU will be a less powerful entity.

For the US: The US is a major partner of the UK---be it in terms of trade or military. The UK's exit
from the EU and the subsequent weakening of the EU will not be a great news for the US and its
scheme of things like war against terrorists and tyrants.

Brexit, if it happens, will have implications; UK Real estate prices may correct (on account of
thinner capital flows from EU), inflation will climb on expensive imports, Londons financial centre
status may get threatened if money flow and settlements are hampered. Goldman Sachs estimates 1520% drop in the sterling as a response to Brexit. The long-term economic impact of Brexit is hard to
discern, but the short term disruption while the UK negotiates and renegotiates is only likely to be
bad news for both sterling and Euro assets.

It is difficult to gauge the precise medium to long-term economic impact of Brexit on both the
parties concerned. However, the outcome of Brexit in my view is the biggest macro risk affecting
fund managers and investors bigger than oil price or even the Fed rate hike. Having said that, at
this moment, it is almost impossible to predict the outcome.
A Brexit could trigger capital flight from Britain. It could have a profound effect on Londons real estate
market, among the most vibrant in the world. Stricter regulations will curb capital flows both from within the
EU and outside it (China and Russia). Brexit will only compound inflation and the sterlings worries.
Conclusion:
Brexit means UK can pursue more options and establishing free trade pacts that can suit its own terms. UK is
forbidden to establish its own free trade regimes because being a member of EU. Ever wonder why

commonwealth realm is considered as useless organisation and have no function other than to remember the
glory of old days? Actually there was a consideration to make it as an economic bloc, but it was blocked by
EU. Now its seriously being considered: Commonwealth free trade. However it depends how quick UK can
capitalize its assets because Scotland and northern Ireland may leave UK in favour of EU. if UK cannot
show it is more lucrative and attracting than EU, why should Scotland and northern ireland stay?
Britain is no longer a single political entity with a unified people. In 2014, 45 percent of Scots voted for
independence. A similar number in Northern Ireland define themselves as Irish nationalists.If - as looks very
possible - Brexit wins the day, but Scots votes to remain in the EU, the question of Scottish independence
will inevitably re-open.
In 1962, former US Secretary of State Dean Acheson said that Britain has lost an Empire and has not yet
found a role.
A decade later, Ted Heath said joining the EEC would be a turning point in our history, our best answer to
Achesons challenge. Now history has turned again. A new role awaits UK.
However, they still think that UK is the greatest country. They forget that British Empire won the WW2,
British Empire was one of 3 superpowers(US and Soviet Union). But The British Empire is gone. They lost
India, they had Suez crisis. And officially the British Empire finished in 1997, when they gave Hong Kong
back to China.
This is why so many of the older generation (who were alive in the 70s rather than the 20-somethings) voted
to leave.
For more than a hundred years, Britain was the largest and most powerful empire globally. Having just
celebrated the 90th birthday of Queen Elizabeth, the world was reminded that when the Queen ascended the
British throne she did so in a century when her country boasted that the sun never set on its empire. At the
same time, it also began to see its former colonies like India, Australia, Canada, South Africa and countries
across Africa, Asia and the Caribbean begin to develop their own independent identities in a changed world
after World War II. Nations do not sit in stasis but evolve to meet new challenges in critical areas of national
security and economic aspiration.
Not that long ago, the Powerful British Prime Minister Winston Churchill during World War II, advised then,
Let us therefore brace ourselves to our duties, and so bear ourselves that if the British Empire and its
Commonwealth last for a thousand years, men will still say, 'This was their finest hour.
Unfortunately, The Power of the Empire did not even last 50 years after Churchills death as they painfully
watch the sun setting on Great Britain, now shrinking it into Little Britain via BREXIT!
The LEAVERS will soon realize that The British Empire now only exists in their heads. That was long gone.
They are definitely and ironically leaving with what is left of Great Britain. Germany and the rest of the
founders of the European Union have to scramble to regulate markets and allay fears of their citizens that
everything is going to be all right.
Since that chapter of their history is closed, the nationalists and racists and xenophobes incited enough Brits
to withdraw sulking to their narrow corner from the wider world.
Their future is very uncertain. It depends on their next actions.
Solution for UK: the Commonwealth
That is obviously a question that answers itself: Canada, Australia and New Zealand are closer to Britain,
constitutionally and culturally, than anywhere in Europe. And their income levels are fairly similar: in 2014,
the U.K. had a GDP per capita of about US$46,000, versus US$44,000 for New Zealand, US$50,000 for
Canada and Australia a little higher at US$62,000.
Canada, Australia and New Zealand are more like Britain than any EU member
By voting to leave the European Union, Britains future relationship with its fellow Commonwealth
members has assumed both a greater significance and a greater degree of uncertainty.
The United Kingdom has been a member of the European Union and therefore has therefore been unable to
negotiate its own trade agreements for several decades. However, after the United Kingdom formally leaves
the European Union, it will again be able to negotiate its own trade deals. While the UK has been in the EU
it has actively pressured the EU to pursue trade agreements with other Commonwealth countries. In part, this
has resulted in the EU initiating negotiations on free trade agreements with a number of Commonwealth
countries. At present, Canada and India are both in the midst of negotiating free trade agreements with the
European Union. Furthermore, a number of Commonwealth countries, including South Africa, Cameroon,
Zambia, and the 12 commonwealth members of the Caribbean Community, already have free trade

agreements with the EU. The EU, through the Lome and Cotonou Agreements, have extended some
preferential trade access to developing Commonwealth countries.
However, the idea of establishing a free trade area within the Commonwealth has garnered interests in the
UK amongst politicians and parties that advocated leaving the European Union who cite the development of
a Commonwealth free trade policy as an important step in reshaping the UK's trade policy. The UK
Independence Party has included a call for a Commonwealth Free Trade Agreement in its policy manifesto
during the 2010 British general rlection. In addition, some members of Britains Conservative Party,
including MEP Daniel Hannan and MP Andrew Rosindell, have written extensively on the merits of
expanding trade within the Commonwealth and the broader Anglosphere.
On October 8, 2012, Tim Hewish and James Styles released their paper "Common Trade, Common Wealth,
Common Growth at the UK Conservative Party Conference in Birmingham, England. The following day
saw British Foreign Secretary William Hague comment upon how the Commonwealth, which had been
'neglected' by previous UK governments, presented "enormous opportunities" for the nation.
Critics of proposals for a Commonwealth free trade area have characterized the concept as "the ultimate
Eurosceptic fantasy.