On June 23rd, 2016, the vote of the public that became known at the early hours of 24th of June undoubtedly marked the referendum as one of the most important in the United Kingdom and by extension the European Union.
An Article by Mr Michalis Economides, CEO and Founder of Chambersfield Economides Kranos at Gold Magazine
According to the exit polls predictions, the majority of the English citizen’s vote showed that United Kingdom would remain in the European Union. But the final actual result of the referendum overturned all predictions as the largest rate of 51.9% voted in favor of the United Kingdom exit over 48.1% that voted the continuation in the European Union.
From the legal point of view, this referendum is advisory and not mandatory. However, it is customary that governments are bound by these referendums.
Therefore, the United Kingdom will indisputably set off the procedures for exiting the European Union.
Pursuantly, under the European Treaties, the withdrawal of a Member State must be completed within the period of 2 years. Of course, the discretionary power of the unanimity vote of the member states of EU confers the possibility for period extension.
In addition, the unpredictable result positioned the European Union and the UK in unprecedented unknown paths. Undoubtedly a number of legal and economical difficulties will occur on the implementation of the referendum result that UK will be called to resolve. Moreover, during the negotiation process of the orderly withdrawal of the UK, measurements for safety, health, immigration and for many others sectors should be decided in a wise manner in order to avoid the collapse of the system.
At this point, it is worth mentioning that in the next few days, weeks and months, legally speaking, the UK exit from the European Union is not real. But, the uncertainty that the referendum brought, today, in the world of the European Union and the United Kingdom, activated a “domino effect” on all areas related to the multinational relations between states and businesses. Already, this morning we observed the first outcome of the referendum; the British pound suffered its largest exchange devaluation in 30 years that triggered the opening of major chain problems in the economy.
Thus, the UK withdrawal from the European Union will generate a “black hole” in the Public debt of approximately 30 billion English Pounds. In addition, it is possible for UK Banks to accrue the necessary liquidity to UK banks amounting to 250 billion pounds. This result is in line with the decline of the British pound, it is almost certain that it will create the UK Serious problems in the internal economy.
Furthermore, with respect to any incidence in Cyprus, certainly the Republic of Cyprus cannot remain unaffected, just like the other Member States, by this development.
My personal opinion is that in the long term, there will be intergovernmental agreements for the smooth continuation of the cooperation between Cyprus and the United Kingdom in the economic, political and business context.
However, the instability will occur until the completion of the UK leaving the European Union will result in numbness of trade between Cyprus and the United Kingdom. This will occur because the large number of English companies are either directly or indirectly in Cyprus, using the United Kingdom licenses which are based on European institutions for their operations within the Republic of Cyprus.
Further, long-term business agreements between the two states should be reviewed until the completion of the output process, since most based again in European legal institutions.
Personally, I do not believe that there is an immediate concern for the Republic of Cyprus if there will be a transition period, where the other member states including Cyprus will be able to make direct interstate agreements with the United Kingdom.
A big issue which should come under discussion between the Member States of the European Union, is whether it is “The principle of the EU end?”.
It is important to consider all of the responsibilities and actions that led to the UK people to vote on leaving the EU. At this point I would like to mention that Scotland and Northern Ireland, which voted as the UK remains in the EU are already discussing their possible secession. Also, the other Member States by means of their MEPs have open discussion topics for review of their stay in the European Union.
Nobody knows if long this decision, the United Kingdom to withdraw from the European Union, will be negative. There is the possibility of long term prove the correctness of this move and what will emerge from the implementation strategies to be implemented in the United Kingdom.
However, short term volatility that has begun to occur in the European Union pillars and the Member States for “what happens next” will undoubtedly have negative consequences in the areas of trade and investment.
It also stressed that the officials of the Member States should consider the state of the “next day” and ponder the problems that led the United Kingdom to withdraw from the European Union and whether the way in which the EU currently operates is correct in the context of solidarity and support of the Member States or if you need complete and radical overhaul of the EU institution.