Financial market participants have largely concentrated over the risks to Britain if it chooses to leave European Union. However, we have been arguing while the cost could be heavier for Britain in the short run, proper policy mix can even be good for it in the longer horizon, but the damage it would done to EU would be irreversible in the longer run.

Norway's ambition shows why?

After UK successfully negotiated a new arrangement with European Union if stays as a member, Norwegian policymakers are planning to sort some of their issues with the 28 member bloc. UK is more attached to EU than Norway, so its exit poses a permanent threat that some could easily follow suit, if EU rules become unbearable for the party in power.

Norway is not a member of European Union, since it was rejected twice by public in two separate referendum. Still it has adopted EU rules and contributes just less than a billion Dollar per year to EU to gain access to single market. With Britain's example it wants to change some rules too. "Thanks to Britain's agreement with the EU, we could solve some of our own issues............We want to have the same options that Britain has with work-related benefits."

Bloomberg did a nice story over this. Check it out here http://www.bloomberg.com/news/articles/2016-02-29/norway-seeks-to-piggyback-on-brexit-deal-to-escape-eu-s-grip

With Britain out of the EU, burdens are likely to go up in EU for similar negotiations. EU's dream of ever closer union, would get shattered, that is the biggest of all risks facing EU upon Brexit.