23 Jun 2016

The votes are in, and the people of Britain have chosen to leave the European Union in an extremely tight referendum, whereby Brexit (aka. “British Exit”) only just took the majority of votes with 51.8%. The whole thing might seem too far away and too confusing to bother wrapping your head around, but this decision will not only affect those travelling to Europe–it could have economic ramifications across the world.

So what does it all mean? Well, beyond the UK Prime Minister David Cameron resigning, it’s too early to tell what exactly Brexit could result in, and we’re all heading into a period of uncertainty. In essence, two of our mates have just broken up, and we’re not really sure whether they’re going to be able to get along, whether the split is going to cause rifts in the group or whether we’re going to be forced to pick a side. But, if we’re going to make any predictions, then let’s just start with the basics:

What is the EU?

The European Union, or EU for short, was formed after the second World War as a way to bring the countries of Europe together and prevent any more pesky wars from starting up. The EU grew over time to encompass 28 countries, and is now a political and economic union that basically allows the free movement of goods, services and people between the member states. 19 of these countries use the EU’s currency–the Euro–and Europeans are able to move between most of these places without a passport.

Why the heck do some Brits want to leave it?

It’s pretty simple actually: independence of course. While Britain seems to love separating itself from Europe at any chance it gets, and many Brits don’t generally identify themselves as “European”, this time around those who voted to leave want political and economic freedom from the EU, so they can make their own decisions on laws and agreements. This could include things like trade deals and immigration laws (which a lot of people are in favour of, fearing that too many immigrants are coming in to the UK and stealing jobs or committing acts of terror). There are a bunch of EU laws that Britain has also had to abide by, some of which are seen as pretty ridiculous (e.g. a ban on irregularly shaped bananas… waaaaat?), which only added fuel to the leave-the-EU fire.

Economically, the UK contributes around 13 billion pounds to the EU budget every year, which many Brits are keen to keep in their own pockets. But experts have argued that the economic downfalls far outweigh the benefits, and the negative effects could rock the entire global economy. Basically, this whole Brexit thing could be one giant blow up waiting to happen.

So… what happens now?

The referendum has come up in favour of Brexit, so Britain will be leaving the EU. But what does this actually mean?

For starters, it will be a bit of a logistical nightmare that will take years to implement. Britain still needs to negotiate a whole host of things with the EU before it can remove itself completely, which could take up to two years and cause a lot of disruption to businesses and the economy. Many of those who were against Britain’s exit hope that this negotiation will result in Britain sticking to many of the same rules, and therefore not rocking the boat too much.

However, if a lot of the rules do change and Britain damages its trade relationship with the EU, then the UK could potentially fall into a recession. There’s simply a whole lot that’s up in the air at the moment, and no one really knows where everything is going to land. Most agree that there will be some detrimental impacts on the economy at least in the short-term, but many economic studies also believe there will be long-term ones too.

Regulations surrounding migration in the UK is the one thing that has a high chance of changing after Brexit, as it was one of the major campaign points for leaving the EU. It’s likely going to mean that Europeans will need their passport to move in and out of Britain, and it will be harder for migrants to settle and find work in the UK. It could also mean that immigrants currently residing in Britain may lose their right to live and work there, and could be deported.

Will it affect Australia at all?

There’s a good chance that changes in the British economy could have ramifications across Europe, and potentially worldwide, but at the early stage it’s too hard to tell. What we do know is that Australia’s trade relationship with the UK will now require renegotiation, and it could be that Britain will make far weaker trade partner’s without the support of the EU.

It could, however, mean that Aussies will find it easier to live and work in the UK, but only at the detriment of other European migrants being pushed out. If the UK prevents these migrants from coming into Britain, there will be more room for Australians to take their place.

What about us travellers?

As for those of us who are or will soon be travelling to the UK or Europe, it could work both ways. Customs lines at airports could become even more nightmarish if immigration regulations change, as EU citizens who can usually enter the UK without going through customs will have to line up like everyone else, meaning the queues could be massive (total drag).

However, economists are pretty certain the pound and potentially a number of other currencies will be falling in the aftermath of Brexit, meaning that international travellers could be enjoying cheaper holidays so long as their homeland currency stays relatively strong. However, flight prices between UK-based airlines and the EU will have to be renegotiated as well, meaning it might be harder to find cheap flights between the two.

All will be revealed over the next few weeks as to what the true meaning of Brexit is–watch this space, we’re almost certainly in for a wild ride.