Venture Explains: Brexit

What is it? This summer, Britain is set to hold a referendum on whether to exit—or Brexit—the European Union.

Why is a referendum taking place? Britain last voted in 1975 on whether it wanted to remain part of the EU, or the Common Market as it was then called. Even though the country voted to stay, the domestic debate over the pros and cons of remaining an EU member has only grown fiercer down the years as the supranational organization gradually extended its geographical and constitutional reach across the continent. In an attempt to settle the matter for generations to come, David Cameron, Britain’s center-right, anti-Brexit prime minister, has set June 23 as the date for a second referendum on EU membership.

What could Brexit mean for the future of Britain and the EU? The pro-Brexit camp within Britain argues that leaving the EU would allow the country to restore sovereignty over its laws and borders, and transform itself into a nimble, free-wheeling, Singapore-style economy. Those campaigning to remain part of the EU warn leaving would severely damage Britain’s economy and diminish its standing as a global military and diplomatic power. As for the view from the rest of the EU, anyone pushing for the deeper integration of European states might be pleased to bid farewell to Britain, which has always dragged its feet on the march towards closer fiscal and political union. While for others, a British withdrawal from the EU risks dealing a serious blow to a fragile organization that has helped deliver stability and prosperity to millions, and which remains a central pillar of the liberal world order. For pro-Europeans, the impending British referendum could hardly come at a worse time, seeing as the EU is now grappling to contend with sluggish economic growth, a migrant crisis, and a resurgent Russia.

Which side is going to win? According to opinion polls, the British public is roughly evenly split on the Brexit question. Big business, meanwhile, is broadly in favor of remaining part the EU, which is the world’s largest single market.