Britain's out of the EU: Here's what happens next

Britons have voted to leave the European Union, their concerns about immigration and the ever-increasing power of the 28-member bloc trumping the attraction of being part of a single market of more than 500 million people. Now what?

European leaders will see Britain's exit as a dangerous precedent and potentially fatal blow to union

A trader from BGC, a global brokerage company in London's Canary Wharf financial centre, reacts during trading after Britain voted to leave the European Union. (Russell Boyce/Reuters)

Britons have voted to leave the European Union, their concerns about immigration and what some saw as the ever-increasing power of the 28-member bloc trumping the attraction of being part of a single market of more than 500 million people and a European project forged from the ashes of the Second World War.

Here's a look at what happens next.

May not be straightforward

The result will trigger a new series of negotiations as Britain and the EU search for a way to separate economies that have become intertwined since the U.K. joined the bloc on Jan. 1, 1973.

Under Article 50 of the Treaty of European Union, talks would likely last two years, with the possibility for extension if all of the remaining 27 EU nations agree. But the clock starts ticking only when the U.K. notifies the EU that it wants a divorce — and some on the Leave side have suggested that this won't occur until 2018.

However, the EU may not accept a delayed exit. "U.K. negotiations with the European Union will prove difficult, given that EU leaders will not want to set a precedent for an easy withdrawal for other countries that could reconsider their status, such as Denmark," said Howard Archer of IHS, a research firm. No matter what, the EU will face issues.

Alongside economic woes, troubles with Greece and the inability to agree on how to manage a refugee emergency, a British exit would deepen Europe's existential crisis.

Could lawmakers ignore it?

Britain's referendum doesn't automatically trigger an exit from the European Union, which has led a few commentators to suggest that lawmakers might simply decide to ignore or slow-ball the process. So could they? "In legal theory that is possible. In practice that is absolutely not possible," said Alan Renwick, the deputy director of the Constitution Unit at University College London. "If there is a vote for Brexit then on Friday the PM will indicate how the process of Brexit will begin."

What about the neighbours?

EU leaders will see Britain quitting as a dangerous precedent and a potentially fatal blow to the European project. Some face growing Euro-skepticism from their own citizens and may feel the need to make a strong case domestically for why the now 27-nation bloc has a future. This could lead to reforms of how the EU works. Future negotiations may be overshadowed by a sense of betrayal and the feeling that an example needs to be made of the U.K. to discourage others from leaving too.

The fallout could also hit Europe's fragile growth. Germany's Finance Minister Wolfgang Schaeuble recently said that "it would be a miracle if a withdrawal of Britain would come without economic disadvantages." On the other hand, a British exit, or Brexit, could spur the European Union into action. Since joining the club in 1973, Britain has shaped the bloc mainly by putting the brakes on the drive toward ever-closer political union, a project that could now be revived with gusto.

What happens to the economy?

The British pound suffered one of its biggest single-day falls in history Friday, plummeting more than 10 per cent to $1.3230 US on concerns that severing ties with the EU will hurt the U.K. economy and undermine London's position as a global financial centre. It later regained some lost ground to trade around $1.3679 US.

Authorities including the International Monetary Fund, the U.S. Federal Reserve and the Bank of England had warned Britain's exit would send shivers through a world economy that is only slowly recovering from the global crisis that began in 2008. Now economists will wait to see if their predictions come to pass.

Analysts at Oxford Economics, for example, think the global market reaction and fears of an EU breakup are exaggerated, saying today's drops "are hard to square with the likely long-term impact on the U.K. — at worst a few percent of GDP in the long run in an economy that is only 3.5 per cent of world output."

    What will it mean for tourists?

    With the pound and euro both dropping, it should make British and eurozone exports cheaper overseas. Travellers heading to Britain and the rest of Europe may find less-expensive meals, hotels, souvenirs and museum admissions because the dollar — and in particular the U.S. dollar — will go further. Airfare for peak summer months probably won't dip, but any taxes and fees levied in Europe will be cheaper.

    Among retailers, analysts expect luxury sellers, which have already seen weaker demand, to be hurt the most.

    London luxury shops could suffer if banks move out, taking big-spending employees with them, said Hana Ben-Shabat, a partner at A.T. Kearney.

    Overall, said Steve Barr at PwC, any prolonged declines in the stock market could make shoppers wary about spending.