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One winner and four losers from the Brexit referendum

The Brexit results are in: The British people have voted to leave the European Union in a historic referendum.

This doesn’t mean Britain has actually left the European Union, but it does mean that they will leave soon. Unlike a typical nation-state, the EU does have an exit procedure that’s laid out in law. It’s not an exit procedure that’s ever been actually put to the test, so we don’t have a great sense of how it will work in practice. But the broad outline is that the referendum sets into motion a two-year period for a negotiated divorce during which time the British government and the EU are supposed to unwind their fiscal ties and lay out a new framework for how the country will relate to the trading bloc.

This could, in practice, mean almost anything — ranging from something like Norway’s extreme close relationship to the EU to something like the arms’ length relationship that Australia or the United States has.

Here’s who won and who lost.

Winner: Southern European Eurozone members

An intriguing contrarian case for Brexit was British economist Andrew Lilico’s argument that "Leave" should win precisely in order to make it easier for the rest of the EU to integrate more deeply.

The eurozone, after all, is a bit of an odd beast. Having a bunch of countries that share a currency but don’t share a tax system or a welfare state means that when particular places fall on economic hard times, they have no escape.

A truly independent country facing the kind of loss of external investment funds that struck Spain during the financial crisis would experience rapid depreciation of its currency. The suddenly much cheaper country would become a more attractive tourist destination, more attractive maker of export goods, and more attractive magnet for a new round of foreign investment, thus helping it recover from the financial crisis.

Conversely, a member of an integrated welfare state facing a rapid collapse of its local housing market (think Florida in 2008) would be stabilized by continued federal inflow of dollars to its health care, retirement, and unemployment insurance systems. Not a bailout of debts incurred by the local government authority, but assistance to hard-hit citizens that helps them get back on their feet and keeps local businesses afloat.

Eurozone member states, however, are stuck in a strange limbo between these two poles, neither fully independent nor integrated into a common welfare state. Which means that when disaster strikes, their means of promoting economic recovery are limited.

Moving to that kind of integrated welfare state is a big project, and it clearly isn’t going to happen anytime soon. But with Britain set to leave the EU and become unable to block new measures in Brussels, it’s substantially more likely to happen.

Britain, after all, is richer than the average EU member state, meaning most of its citizens would probably end up paying slightly higher taxes for slightly fewer services under such an arrangement. Britain is also temperamentally skeptical of the case for deeper European integration — and, crucially, not a member of the euro, and thus not particularly desperate to make the euro work. A Europe without Britain will be one that’s set on a more rapid course to even deeper forms of fiscal integration.

Loser: The British economy

In the short term, the vote to leave the European Union is going to commence a period of disruption and uncertainty in which foreign direct investment in the UK takes a temporary pause while investors wait to find out what the long-term situation will look like.

That, in turn, will cause the value of the pound to fall and likely prompt a recession whose severity and duration will have a lot to do with the short-term policy choices made by the UK government and the Bank of England.

This possibility was discussed extensively during the campaign, and evidently Britain’s voters decided that a little short-term turbulence was worth the possible long-term upside of getting out of the EU. The real risks to the British economy, however, concern something else entirely — the long run.

Right now, many large, multinational companies like to put their European headquarters in London. London is a great city to live in, and its English-speaking population and low-by-European-standards taxes make it an attractive base of operations since the European Union’s single market means you can do business throughout the continent from anywhere.

Leading Leave campaigners say that post-Brexit they will negotiate a trade pact with the EU that lets them retain that kind of access, but there’s no guarantee they will succeed. The French government might deliberately try to block them, figuring that if executives can’t station themselves in London they’ll fall back on Paris. The Irish government might see enormous upside for English-speaking Dublin.

Similarly, the UK’s major export industry is the financial services cluster in London. Thanks to the EU, London-based banks currently serve a continent-sized market just like New York-based ones. If the post-Brexit UK can negotiate deep market access with the EU, that will stay the same. But if it can’t, European banking will likely migrate to Frankfurt and Amsterdam. And the governments of Germany and the Netherlands may want to make sure that happens.

Loser: David Cameron

If you’re wondering how this entire referendum business came about, the answer is that British Prime Minister David Cameron had a problem heading into the UK’s 2015 general election. He and most of the other Conservative Party leaders, reflecting the preferences of the British business class, wanted to stay in the EU. But a growing number of Conservative Party voters, driven largely by anti-immigration sentiment, wanted to leave and were tempted to vote for the anti-European, anti-immigrant UK Independence Party (UKIP).

Cameron’s solution was to promise a referendum on EU membership if the Conservatives won the election — something the opposition Labour Party wasn’t promising.

Vote UKIP, Cameron argued, and you’d get Labour — and no referendum. The best way to get the UK out of the EU would be to vote Conservative, even though the Conservatives weren’t promising to leave.

This was a neat trick, but one that was stunningly short-sighted. Because though it succeeded in delivering an election victory for the Tories, the referendum campaign itself badly split the Conservative Party between Cameron’s "Remain" faction and a substantial chorus of pro-Leave politicians led by former London Mayor Boris Johnson, Cabinet Minister Michael Gove, and former Minister Iain Duncan Smith.

Cameron remains prime minister but he announced his intention to resign by the fall Friday morning. He’s just been humiliated, and the ambitious pro-Brexit politicians who won the referendum will seek to overthrow him with the support of Tory backbenchers. The argument that leaving the EU ought to be conducted and negotiated by people who actually believe in the policy seems pretty compelling, after all.

Loser: George Osborne

Even more clearly than his boss David Cameron, it’s George Osborne, the chancellor of the Exchequer, whose personal political career was on the line in this vote.

Osborne is essentially Britain’s Treasury secretary, except that because Britain isn’t a military superpower, his stature vis-à-vis the Foreign and Defense ministers is higher. Even more than that, Osborne is effectively Cameron’s number two (the UK only sometimes has a formally designated deputy prime minister, and now is not one of those times) as well as his intended successor as leader of the Conservative Party.

Losing the vote badly jeopardizes the ability of the pro-EU faction of the party to retain control. The win sets the party up for a lot more trouble and infighting, but Osborne is likely to come out ahead.

Loser: Nordics and Eastern Europe

The EU is divided along a number of different lines. But one tension is between the countries whose political classes are deeply enthusiastic about European integration — primarily the six founding members, Germany, France, Italy, Belgium, the Netherlands, and Luxembourg, joined by countries like Spain and Greece that see the EU as guaranteeing the stability of their political systems — and a more diffuse set of countries that prefer a looser union.

The latter group includes Denmark and Sweden, both of which (like the UK) opted out of membership in the eurozone common currency union, as well as many Eastern and Central European countries like Poland and the Czech Republic, whose experience of Communist rule and non-experience of the three-decade social democratic growth miracle in the aftermath of World War II have bequeathed a more right-wing political culture.

The UK is the most significant country in this loose-union bloc, and their departure will significantly weaken its presence in Brussels and ensure that the "ever closer union" school of thought would win future policy battles.

Watch: How the euro caused the Greek crisis