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What is 'Brexit'

Brexit is an abbreviation for "British exit," which refers to the June 23, 2016, referendum whereby British citizens voted to exit the European Union. The referendum roiled global markets, including currencies, causing the British pound to fall to its lowest level in decades. Prime Minister David Cameron, who supported the United Kingdom remaining in the European Union, announced his plans to step down in October 2016, as a result.

BREAKING DOWN 'Brexit'

Supporters of Brexit based their opinions on a variety of factors, from the global competitiveness of British businesses to concerns about immigration. Britain has already opted out of the European Union's monetary union -- meaning that it uses the pound instead of the euro -- and the Schengen Area, meaning that it does not share open borders with a number of other European nations. "Out" campaigners argued that Brussels' bureaucracy is a drag on the British economy and that European Union laws and regulations threaten British sovereignty.

Mohamed El-Erian, the chief economic adviser at Allianz, wrote in a Bloomberg editorial that a British vote to leave the European Union is likely to impose major instability on top of economic fragility and artificial financial markets. (See also: After Brexit: Who's Next?)

Scotland's Stance

Popular support for Brexit varied over time, but the June 23rd vote demonstrated that British citizens believed that Great Britain can survive without the economic cooperation, trade agreements and partnerships that benefited the country for the past several years. Brexit is tied in with Scotland's membership in the United Kingdom. Scotland voted to remain in the European Union, and after the narrowly contested vote, First Minister Nicola Sturgeon said in a statement on the Scottish National Party’s website that she plans to explore all options to remain in the European Union.

Brexit Fallout

It may take at least two years following the vote for the United Kingdom to exit the European Union completely, as per the provisions of Article 50 of the Lisbon Treaty. As such, examples of Brexit's future impact on British citizens are mostly speculation; however, experts suggest that Brexit is likely to mean slower economic growth for the country. A slowdown in investments may also lead to fewer jobs, lower pay and higher unemployment rates. The absence of seamless access to European markets also may mean fewer exports and foreign investments. Additionally, consumers and employers reacting to "doom and gloom" news about Brexit's potential fallout alone may contribute to an economic slowdown as companies hire fewer people and consumers spend less money.

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