Referendum: UK votes leave, Cameron to resignby
The establishment has woken up this morning to find that their worst nightmare has come true, as the UK voted to leave the EU.
Late polls, including AccountingWEB’s very own Brexit barometer, indicated a late swing towards remain, but in the end the result defied experts, pollsters and the bookies and the 52%-48% outcome has given the government the bloodiest of noses.
A seismic night in politics ended with Prime Minister David Cameron announcing his resignation, stating that he was "not the right captain to steer the country to its destination". Speaking outside 10 Downing Street the PM announced that the country needed "fresh leadership", stating that he remain in office for the next three months to 'steady the ship', then trigger a leadership contest to choose the Prime Minister who will lead the UK out of Europe.
One of the most striking developments was the visible split between those who claim to feel the benefit of EU membership and those who don’t. A pattern emerged throughout the evening of small but frequent gains for leave in provincial areas being pegged back by big wins in metropolitan regions for remain. In the end these large gains were not enough to maintain the status quo, and those in power must now come to terms with the monumental task of extracting the UK from the European Union.
Scotland voted comprehensively for remain (62%), with SNP leader Nicola Sturgeon repeating her assertion that the country was being “dragged out of the EU against its will” and raising the prospect of a second independence referendum north of the border.
So at this early stage what does the leave victory mean?
The people’s verdict now requires the government to untangle a huge swathe of trading agreements, national legislation, tax treaties, accounting rules and other protocols that have been thrown into disarray by the exit vote. Some commentators estimate that this could take up to 10 years of parliamentary time to untangle.
Experts also predict that the result is more than likely to kick the government’s making tax digital plans into the long grass for the foreseeable future as legislators battle to get to grips with the UK’s European extraction.
From an economic standpoint George Osborne, whose position is also under threat, promised an ‘emergency budget’ if the UK voted out, and many observers will be keen to find out if the Chancellor will now follow through on his threat to implement £15bn of tax rises, £15bn of spending cuts, a 2p rise in the basic rate of income tax, a 3p rise in the higher rate, and a 5% inheritance tax rate to 45p.
After riding high on the back of positive news for the remain camp prior to the polls closing, the pound plunged throughout the night, at one stage suffering its biggest ever one-day fall of 10% (it swung by 7% during 2008’s financial crash).
While many businesses put their investment plans on hold pending the outcome, opinions differ on how the vote will impact on business both big and small.
Economist Richard Murphy argued that a recession is now unavoidable, stating that investment in the UK will be paused during renegotiation. “No big business is going to sink millions or even billions into our economy without knowing what the future terms of UK trade might be”, he said.
However, AccountingWEB regular Norman Younger stated that he was confident that the UK could prosper with an economy driven by high technology exports.
TaxTV’s Giles Mooney was optimistic for accountants, stating that businesses will now need advice “more than ever” to deal with markets, staffing and employment laws.
As we move into a new era of British politics what is clear is that this result will have an impact on everything – the economy, politics, health, education and immigration, to name but a few.
During the campaign we heard a lot about what is wrong with the current system, but little detail on the mechanics of what will happen in the event of an exit. The negotiations are likely to be long and painful, and AccountingWEB will be on hand to report on the issues that matter to our readers.
*8:36am: This article was amended to include news of the Prime Minister's resignation*