Brexit's Consequences For the UK—and the EU

On June 23, 2016, the United Kingdom will hold a referendum on whether it should remain in the European Union or leave. A British exit, or “Brexit,” could have serious economic and political consequences for both the UK and the rest of the EU. Such an exit is a distinct possibility, with polling demonstrating a close race.

Should Brexit become a reality, the UK's post–referendum trajectory will depend on whether the transitional period is a flexible but orderly exit carried out in a spirit of partnership with the EU, or whether the split is acrimonious and messy, without properly tying up all the legal loose ends. In a scenario in which pragmatism prevails over resentment, economic and financial tensions could be limited by London and Brussels negotiating an amicable separation agreement. However, broader political considerations, including the EU's desire to avoid further departures by making an example of the UK, might lead to a far more damaging outcome for all parties.