Voters in the U.K. shocked the world last week when they voted to secede from the European Union. Investors around the globe reacted by sending share prices down nearly across the board – London’s FTSE 100 index plunged -5.6% to 5982.20 on the news, with the Dow Jones Industrial Average falling -4.9% to 17,122.85, NASDAQ down -6.3% to 4,600.92 and the S&P 500 off by -6.2% at 2,000.31.
But the negative reaction to the news may be overdone. Yes, Britain leaving the E.U. would be a potentially disastrous blow to the world’s largest trading bloc, which links 28 nations, but there are a few reasons to hope that it might not even come to pass, according to the BBC:
- The referendum is not legally binding.
Voters in Great Britain approved the so-called “Brexit” by a narrow margin, 52% to 48%. But the vote was a non-binding referendum, meaning the British Parliament must still pass the laws that would actually force an exit and then ratify those results. With nearly every member of Parliament opposed to an exit, there’s a good chance that either the House of Lords or the Commons could vote to scuttle the move before it even sets sail.
- Even if it goes into effect, there are 2 years of negotiations in store
In the event that a Brexit does occur, the U.K. would still have a 2-year window just to negotiate the terms of its withdrawal with the rest of the E.U. The timeline for an actual exit could be months or even years beyond that.
- The U.K. could still belong to a European single market
Great Britain could still belong to a single market in Europe, even after a Brexit, meaning it would retain the free movement of goods, services, money and people within the E.U. without merging its economy with the rest of Europe.
- The U.K. could still belong to a free trade zone.
Or the country could negotiate a common market, similar to the free trade area Britain was a member of before joining the E.U. in 1992.
- Scotland and Northern Ireland want to stay
The votes in Scotland and Northern Ireland were strongly anti-Brexit, with Caledonians voting 62% to 38% against and their Hibernian cousins voting 55.8% to 44.2% against. Another vote on Scotland’s independence is “highly likely,” according to Scotland’s 1st Minister Nicola Sturgeon. And now that the stark economic consequences have been laid bare to British voters, it’s possible that popular sentiment has shifted from leaving the E.U.
- Bonus round: A new general election could turn the tide
Upstart MPs could force a general election and campaign on the pledge to remain in the E.U. If that faction won the election, it could claim that the result invalidates the Brexit referendum. Two-thirds of MPs would have to vote for a general election to be held before the next scheduled one in 2020, according to the BBC.