World financial markets were in turmoil as results of the referendum on the British exit from the European Union appeared to show that voters in the U.K have voted in favor of leaving the E.U.
Historic drop in British Pound
At midnight, EDT Dow futures were down over 700 points (4%), and the S&P futures were down close to 5%. The British pound was down nearly 12% against the U.S. dollar in early morning trading in London, and the Euro was down more than 4% against the U.S. dollar. In Asia, the Japanese Nikkei was down 8% in mid-day trading in Japan. The numbers will undoubtedly change in the hours to come as the ramifications of the Leave vote become clearer.
A very close race
With two-thirds of the votes counted, the results showed the Leave vote leading by a margin of 51.7% to 48.2%. The major news organizations in the U.K. called the election for Leave just before midnight EDT.
The ramifications of Britain’s exit from the E.U. will take many days to sort out. There is no set process for how the U.K. will manage its exit from the E.U. and what the effect on the E.U. will be. In the short term, there will be upheaval in the world financial markets and a significant amount of uncertainty in Europe.
Not a good day for David Cameron
Politically, it appears that there will be calls for British Prime Minister David Cameron to submit his resignation as he made himself the face of the Remain campaign. In the U.S., supporters of Donald Trump will likely feel encouraged with the results. One of the major drivers of the Leave campaign was dissatisfaction with the immigration policy of the E.U. being forced on Britain.
One certainty is that is a historic moment for the U.K. and for the E.U.