In the aftermath of the Brexit referendum in the U.K., President Barack Obama and his immediate successor will face a tough dilemma when it comes to Europe. On one hand, the U.K. has been America's closest ally for decades; they share countless cultural, social and linguistic links. London hosts hundreds of European headquarters for American companies. In financial services, London is tied in many ways to Wall Street. And the U.K. is still the U.S.'s second trading partner in Europe (after Germany).
But what happens now, with a semi-detached U.K. facing yet another Scottish referendum and a possible backlash in Ireland?
Across the channel stands a unified European market with 450 million consumers, a single currency for 19 countries (out of the 27 remaining EU members) and a fairly regulated trading block with which the U.S. is engaged and intends to engage even more through the Transatlantic Trade and Investment Partnership which is currently being negotiated. Now, the shots will be called from Berlin, Paris and Brussels. Ironically for such a proponent of free trade and free markets, London will no longer have a voice.
Between the U.S. and the "new U.K.", everything will need to be reinvented.
First, on the business side, close relations will remain with London, the world's most international financial center after Wall Street; it is also somewhat ironic that London, a great cosmopolitan capital, voted on June 23 (as the only constituency in England) to remain within the EU but will soon become the capital of a pro-exit, fairly isolated country.
As for investments, chances are that U.S. corporations will look closely at opportunities on both sides of the English Channel, as currency fluctuations and market size will often make a difference. For those large companies with an existing Eurozone presence, it may not be much of a problem as they will be able to split between their operations. As for new investment projects, it will be an entirely different matter as businesses will rightly wait to see the result of U.K.-EU negotiations in the next couple of years. Whether the U.K. will be in a Norway-style economic situation or a Serbia, a fairly isolated European country which does not even belong to European economic space, time will tell as London will try – amid a great deal of uncertainty- to impose of its future relations with the EU.