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Europe’s fractured future dominates WEF discussions

Experts at the World Economic Forum (WEF) in Tianjin sounded an alarm about Europe's fractured political landscape in the aftermath of the United Kingdom's decision to leave the European Union.

"Brexit is a big risk because of the context it occurred in," observed Ian Bremmer, president of political consultancy Eurasia Group, during a WEF panel discussion Sunday.

He pointed to the major role that so-called identity politics played at Thursday's historic referendum in the U.K..

A 'vote remain' supporter walks past a 'vote leave' supporter outside Downing Street, London.
Kevin Coombs | Reuters
A 'vote remain' supporter walks past a 'vote leave' supporter outside Downing Street, London.

"There was a very strong anti-immigration push. It [the vote] wasn't just about jobs, but also Europe's ability to integrate others," Bremmer said.

The leave campaign was dominated by right-wing, populist rhetoric from players such as the UK Independence Party (UKIP), led by Parliament Member Nigel Farage, a group known for its strong anti-immigration stance.

Following Prime Minister David Cameron's resignation Friday, a pro-Brexit party leader is now widely expected to negotiate the U.K.'s exit from the EU.

Amid expectations for the leave supporters to gain greater political control, Bremmer said a further unwinding of right-wing populism across the European continent was a bigger worry than Donald Trump becoming U.S. President.

"There's been a lot of breakdown in the notion of trust. People used to trust politicians and business leaders [in Europe] but now that's diminished," echoed Larry Stone, president of group public and government affairs at BT Group, also participating at the same panel.

Combined with Europe's immigration issues, the situation amounted to a "perfect storm," he said.

"I don't think we look at the Brexit vote as a referendum on the financial services industry," remarked Michael Falcon, Asia-Pacific chief executive officer of global investment management at JPMorgan Chase. "It is, to the point that Ian made, a reflection of those larger trends and a global wake-up call...relative to voices in significant chucks of the population. The pressure is on to reform and make changes."

Falcon added that his bank was not calling a recession in the U.K. amid expectations for stronger inflation as a result of the weaker pound. "We don't see this derailing the global recovery at this point. It's a shock, not a crisis and so far, markets seem to be handling it reasonably well."

Current rhetoric surrounding the results of the referendum have largely been negative but Bremmer highlighted a few positives.

"There is an argument to be made that over the next five-10 years, if the U.K. stayed in, EU would become more challenging….. For the past seven years, we've complained in every manifestation how the EU's resolve anything is to kick the can down the road, so finally one member decided to kick the can."

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CORRECTION:

This report has been updated to accurately reflect the spelling of Ian Bremmer's surname.