We have iterated many a times, Brexit is not doomsday for UK alone, it will be equally (likely to be more) painful for the European Union. But we guess, with all the buzz surrounding sterling, we guess another reminder is necessary.

European Union, as of now running a very large trade surplus with United Kingdom, four times the size of deficit, U.K. running with the rest of the world. On the U.K.’s side it has trade agreements with 60% of the world via European Union. U.K. receives large chunks of capital flows to its economy from European Union. U.K.’s prized banking sector could suffer from exit if laws are toughened to do business with EU. The arguments goes on and on and on……….

And they are all real (at least most of them).

And from all this arguments, it is quite evident that U.K. may face an economic and legal storm upon exit from the union and biggest threat is uncertainty.

It need to be stressed, EU FACES EXISTENTIAL THREAT.

• Britain’s exit from the union will come at a time when, EU skeptics are on the rise in almost all countries.
• Countries such as Austria and the Balkans taking up unilateral actions, threatening the very fabric of cooperation.
• Catalonia is trying to break free of Spain.
• Some Nordic member such as Norway looking for similar negotiations with EU, like Britain.
• Migrants are still pouring in thousands, which needed to be dealt unilaterally to avoid instances, where countries like Turkey could use to gain unfair advantages.
• Despite EU, being far larger than U.K., Britain is much advanced in militaries’ and information tactics and EU’s position in world stage would suffer.

Exit of Britain, European Union’s second most powerful member would weaken the bloc permanently. Since Euro, which represents 19 countries may not represent the damage well due to average out, cost will start reflecting in bond spreads, which are likely to widen based of investors’ perception of an economy, which could hit exit next or suffer more from Brexit.