What next if Britain votes to Leave at the Brexit Referendum?
At 7am on Friday, within seconds of the announcement of the result, economists expect the value of the pound to take a hit on the currency markets around the world.
David Cameron is likely to make a statement on the steps of Downing Street setting out how the government will respond to the country’s decision to leave the European Union.
In his statement, he will try to reassure traders before the London Stock Exchange opens for business at 8am.
However, the Treasury and the Bank of England will be watching the markets closely. The Bank governor, Mark Carney, could be forced to step in to prop up the pound if the value of sterling falls dramatically. This has not happened since “Black Wednesday” in 1992 and the Bank would be deeply reluctant to act in this way.
In the days that follow, the Bank’s Monetary Policy Committee could also meet to review interest rates in response to turmoil in the markets.
The Prime Minister has said he will immediately inform Brussels that he is triggering Article 50 of the EU Treaties – the formal legal mechanism by which a member state leaves the European Union.
From the moment that Article 50 is triggered, a move that can only be made by the government, there is a period of up to two years for negotiations of a new contract between Britain and the EU – the terms of Brexit referendum.
Negotiators will have to piece together new trade deals, new border security arrangements, the legal status of migrants who are living in the UK, and of the British expatriates who are resident elsewhere in Europe.
Downing Street will have to choose members of the team to negotiate the new trade deals. The government is likely to bring in business figures as well as top officials from across Whitehall, perhaps forming a Brexit Department under the leadership of a senior Cabinet minister.
Leave campaign leaders will put Mr Cameron under pressure to deliver their plan for an immediate repatriation of key powers from Brussels to Britain. They have set out the new government emergency laws which they say will be required after a Brexit referendum vote to curtail the influence of the European Court of Justice, return billions of pounds to the UK to be spent on the NHS, and place new controls on immigration from Europe.
Politically, Mr Cameron’s own position will be in peril. He may be urged by some of his Cabinet ministers to stay in his post in order to provide stability and to lead the negotiations in Brussels.
However, many Westminster observers and MPs on both sides of the referendum debate believe it would be impossible for him to continue as Prime Minister after campaigning so hard for Remain and that he would quit voluntarily.
If he does not resign, he could face a leadership challenge from Tories who believe his position will be untenable, although several rebel Eurosceptics are privately suggesting that Mr Cameron’s best hope of keeping his job is if Britain votes to leave the EU.
If he quits, a leadership election will be held, with as many as 10 potential candidates already said to be “on manoeuvres”.
The front-runners will almost certainly be the Leave campaign leader, Boris Johnson, while his Brexit-supporting colleague, Michael Gove, the Justice Secretary, is also certain to be urged to run, despite previously insisting he does not want the top job.
The leadership contest could take place over the summer, with the new leader announced at the Conservative Party Conference in the first week of October.
After a period of time to establish himself or herself in Downing Street, the new leader could seek a new mandate from the country, and call a general election for the spring or autumn of 2017.
For this to happen, the Fixed Term Parliaments Act would need to be repealed, as under this law the next election is not due until 2020. If the Tories were leading in the polls by early next year, there would potentially be a majority in the Commons for scrapping the Act and calling a General Election.
However, if the Remain campaign’s warnings of recession and job losses prove correct, the new Prime Minister may be reluctant to go to the country.
What next if Britain votes to Remain in the EU?
On the face of it, David Cameron will be in a far stronger position if he wins the referendum, after campaigning vigorously for keeping Britain in the EU.
But victory could come at a high price. If Remain wins by a narrow margin – under 10 percentage points, for example – he is almost certain to face a leadership challenge within days.
More than 50 Tory MPs are rumoured to be so angry at the Prime Minister’s “scare tactics” and use of the government machine to help the Remain campaign that they will trigger a vote of no confidence in his leadership immediately after the result.
If he loses this vote, Mr Cameron’s career as PM will be over. The Tories will then choose a new leader in an election in which he will be unable to stand.
To be safe, the Prime Minister must win by an overwhelming margin – such as 60 per cent for Remain to 40 per cent for Leave.
But with polls pointing towards a close result, Downing Street has already begun working on a plan to save Mr Cameron’s leadership. He is likely to try to seize the political agenda with a policy blitz, focusing on social mobility with a new life chances strategy. Key decisions will also be taken on Heathrow airport, with possible votes on a replacement for Trident.
In a statement outside Number 10 after the result is declared, Mr Cameron may offer new concessions with fresh plans to crack down on migration in an attempt to appease his Brexit-supporting colleagues and reunite the party and the country.
If Remain win by a tiny margin, Mr Cameron could also be forced to carry out an immediate “rescue reshuffle” in an attempt to reassert his authority. If Remain wins emphatically, the PM will have more time and may delay his reshuffle until the autumn.
Either way, leading Brexit referendum campaigners will need to be nurtured and promoted within government in order to heal the deep divisions within the Tory party.
Boris Johnson is expected to be offered a role in a mid-level Cabinet job, possibly as Transport Secretary. This would put the former Mayor of London in a difficult position as he would be forced potentially to oversee the expansion of Heathrow Airport, a policy which he has promised vigorously to oppose.
Figures close to Downing Street have hinted that Liam Fox, the pro-Brexit former defence secretary, could be brought back, while Chris Grayling, the Leave campaigner, is said to be safe in his Cabinet job as Leader of the Commons.
However, pro-Brexit Tories are warning that MPs will be “on strike” whatever the result, and will refuse to back Mr Cameron and George Osborne in key Commons votes. If the Prime Minister cannot get any of his reforms past his own MPs in the Commons, government will become impossible and another election may be needed.
Many economists expect that the markets will respond with relief to a vote for Remain, while for the majority of companies and their staff in Britain, business will continue as usual.
In Europe, Mr Cameron’s success will be welcomed. But relations with other EU countries will also change. His renegotiation deal will need to be enforced and passed by politicians in Brussels to deliver key reforms such as the “emergency brake” on paying benefits to EU migrants.
The European Parliament effectively has the power to veto Mr Cameron’s deal and he will need to win their backing in the weeks after the referendum to deliver the reforms he has promised.
