yeah. i think there is a case to be made for that, but whether or not that is an option tomorrow morning i don't know. i mean, he's really staked his career on this going through. and this was a gamble that he took to appease the skeptics in his party. >> the vote in the uk has been called by itv news, bbc, several other british broadcasters the campaign to leave the european union in britain has won. moments ago, the leader of the uk independence party spoke to supporters.

for the latest we turn to nbc's

kelly cobiella in london. >> reporter: only about 50 districts left to report their vote tallies at this point and the leave camp is ahead by some 1 million votes. so pretty clear why the broadcasters here in britain are now projecting a win for an exit from the european union. that referendum vote is permanent. there is no way back at this point. this is what the voters have decided. and so now the next steps. the politicians will look at the next steps. prime minister david cameron, we expect we will hear from him this morning once the official vote tally is announced. that should come in another two hours from now depending on how long it takes the chief counters in manchester to gather all of the votes from these different regions throughout the united kingdom. we expect to hear from david

cameron. we've already heard from scotland's first minister nicholas sturgeon. you may recall there was a vote, a referendum vote in scotland a couple of years back to decide whether or not to break away from the united kingdom. they decided not to break away. but they were very much in favor of staying with the european union. nicholas sturgeon saying this vote makes it clear the people of scotland see their future as part of the european union. scotland very much voted on the remain side. so there is now this question moving forward, lawrence, as to whether or not this idea of leaving the united kingdom for scotland reemerges, that scotland holds yet another referendum, the beginning of the dissolution essentially of the united kingdom. that could be in the future. but in the immediate term we have of course in the next few hours, we have the announcement

of the final vote. we have most likely a statement from prime minister david cameron on one hand to settle the markets a bit, to try to anyway. and reassure the country. and then moving forward in the next week or so a trip to brussels to the european union, to the european union headquarters to invoke what is known as article 50, setting in motion this exit plan, a two-year exit negotiating -- the uk negotiating its way out of this union of 28 countries, lawrence. this is going to be a very protracted and potentially painful two years, depending who you listen to. >> kelly, thank you very much for that update. back here in the studio with dominic rush. let's talk about that negotiation. it is going to be much more complex than the original negotiations to join since over

the years the layers and layers of complexity thicken on this. the uk cannot just say in those negotiations, well, we don't care what you think, we're leaving. they've got treaties. they've got signed agreements that -- and if they did try to play too tough in the exit negotiations then europe can play tough on the negotiations that follow the exit, which would be just exactly how much does a german-made car cost in the uk? >> yeah. this is going to be incredibly complicated and politically fraught. we're already seen today france, it looks like they're going to say there have to be consequences for you leaving. so they're not going to cut the uk an easy deal. germany must be -- there's going to be a lot of bad blood across europe now. there already was bad blood. you only have to watch the eurovision song contest to see how much we don't get on with each other.

the -- and now this treaty's broken down and we're going to have to renegotiate country by country. when they're saying two years to do this article 50 i don't believe that's going to happen. >> but the bad blood thing is simple enough sounding at first blush. but france still needs the uk as a trading partner. germany still needs the uk as a massive trading partner for germany and for france. and so they can be emotional about it if they want to, but it's hard to believe that european trade ministers and european finance ministers would look at this and think okay, now's the time to fight with each other instead of figure out another form of cooperation for trading with the uk outside of this framework. >> sure. but this presupposes that these people are rational actors. and i think sometimes we're not. sometimes politics is a blood

sport. what do your voters think about this? if oar you're in france and you running for re-election, are you going to cut england a good deal because it's good in the long term -- the long-term benefit of your country or are you going to play to your base? as we've seen time and again, politicians play to their base. we're going see a lot of nasty negotiations. >> we're joined by phone from ian bremer. nyu political science professor. ian bremer, your reaction to tonight's news. >> well, i think it's going to be enormously challenging economically for the brits and the europeans. and coming off the conversation you were just having, it's not that we need europeans to be rational actors. i think they are rational actors. but i think we need to recognize it's not just about economics. it's about politics. if you look at popular views across europe, euro skepticism, opposition to europe, desires to leave europe, desires to have

their own referenda are significant and in some case majorities across many of the european states and those governments do not want to see brexit lead to a complete unwind of the european union and the you're you' eurozone. the desire to punish the uk economically and the desire to draw this out into a two-year process on the part of eu leaders that not only want to stay in the eu but also want to stay in power, that do not want the extreme left wing and right wings of their own political spectacul spectrums to come into power, that's going to argue to them very strongly and very rationally to make this process economically very punishing. britain will be heading into recession. they're going to need to raise taxes. whether or not it's osborne and cameron's emergency budget or something else. it's going to be very painful for the british people.

and it's also going to be very painful for the europeans. >> why are you so confident that britain will go into recession? >> well, i think you look at pretty much every economist that's done studies around this, and if you look only at the economics you see that the financial sector is going to tack a significant hit. you look at manufacturing jobs, they're going to take a hit. and uncertainty will punish the markets more. now, i'm not an economist. i'm a political scientist. unfortunately, the politics in this instance actually works toward worse economic outcomes, not better. so 2349 greek crisis, for example, the economics for greeks were disastrous but the politics actually kept the germans and other eu members wanting to keep the greeks in. and so it didn't matter if it was going to be expensive. ultimately they were going to make it happen. here the economics are problematic in the near term for the brits and the eu as they figure out the unwind. but that would be if both actors were trying to actually act to

try to find compromise. they won't because the politics are moving in a different direction. so at least for the coming one to two years i think we can say with fair certainty that britain will be in a recession. we also have to ask where the scots will be. will they have their own referendum? i've seen it in northern ireland just in the past minutes sinn fein, the nationalist movement there has argued that the british government with this vote has forfeited any mandate to represent economic or political interests of the people in northern ireland. there will be an argument for irish reunification now that the uk is out but ireland itself performing well economically is in. this is an absolute watershed moment in the trans-atlantic relationship and of course for europe itself. >> well, dominic, there's been an argument for irish reunification ever since britain snatched the top of ireland there in northern ireland, having -- predating the existence of a common market or the european union.

and so we may see more of that. but what is your reaction to the notion that recession is certain now for britain? >> going back to ian's point, the international monetary fund said last week that if britain did exit that the uk would go into recession. it seems to be the weight of evidence from economists that this is a terrible move for the uk economy. you think of how reliant the uk is on financial services, for example. that's because the uk was -- because the city of london's very well positioned and it has a strong history of banking but it was strong because of its position within europe. and now we're out. so they're all going to be reconsidering how they come to grow their businesses. and that's why you've seen hsbc's stocks falling so sharply in shanghai today. there's going to be a lot of rethinking from big businesses about whether they want to be in

the uk, if they need to be in the uk. if they want to be in europe. maybe they want to be in ireland now. >> we're joined now by cnbc and msnbc contributor ron insana. ron, what's your interpretation about how this affects the united states? >> well, it does complicate the economic outlook for us, lawrence, as well insofar as the federal reserve said only a few days ago that this particular development could keep them from raising interest rates anytime soon. so it looks like fed policy goes on hold because our central bank is concerned that a potential recession in the uk, a deepening recession in europe, financial market instability which we're seeing all around the world tonight, the nikkei in japan is down almost 7%. the dow is looking to open over 600 points lower tomorrow. that could derail our own economic recovery such as it is. the economy in the u.s. has been a mixed bag over the last several months with respect to our numbers. unemployment rate has fallen by the job growth figures have stalled. so it does put a question mark out there as to where will the

catalysts for global growth be in the relatively near future, which could affect our own growth here at home. so it has implications for growth. it implications for what the central bank with the federal reserve does in the future. in my estimation they will not raise interest rates again this year. and there's so much currency turmoil going on tonight. the british pound has fallen more than 13 cents to the lowest level since late 1985. this is a very disruptive event. when you get financial market events like this, you do often get policy makers' responses. so we'll have to see just what central banks around the world do to keep now a market response from becoming an economic problem. >> ron, we're already in the middle of summer here in the united states. the biggest tourist season for american travelers to the uk. speak for a moment to those people who are sitting there look at their reservations and their plane tickets to travel to the uk tomorrow or at any point in the summer. the big news for them is your vacation just got cheaper. >> a lot cheaper.

i mean, leave now. this is basically the story. at $1.36, which is the value of the pound against the u.s. currency, again, we've not seen that level since about 1985. and the pound has fallen in one night as much as it's ever fallen in history. so this is a great devaluation, if you'll pardon the expression. yes, for anyone who is inclined to travel to london, that has gotten immensely cheaper. now, whether or not other destinations get cheaper is unlikely. the dollar has fallen precipitously against the japanese yen. if you're planning a trip to tokyo that just got infinitely more expensive. these currency fluctuations, though, lawrence, reverberate in other markets as well. our interest rates have just tumbled rather sharply. the yield on our ten-year treasury note has fallen to 1.5%. just a day ago it was at 1.7%. that's good and bad. lower long-term interest rates obviously help to stimulate economic activity, lower mortgage rates. but it's also reflective of the moment right now where market participants around the world are a bit panicky.

so they're putting money in safe haven investments like u.s. treasury bonds, like gold, which is up about -- at the moment $73 an ounce. that is an enormous move. so there's a great deal of fear out there that this event that has just been undertaken in the uk will have global economic consequences including here in the united states. >> ron insana, thank you very much for joining us tonight. we really needed you on this story. >> my pleasure. >> we're joined by ben jacobs, political reporter with the "guardian." ben, walk us through the politics of this when britain wakes up in a couple of hours. >> the politics of it are going to be very, very messy when britain wakes up. that you have prime minister david cameron has staked his entire tenure and power on this. and it doesn't look like he'll be long for downing street. you have the entire political establishment of the uk, the heads of all three major parties have rallied around this. this is something that really represented sort of the populist upsurge from older blue-collar

discontented voters. and it's poised to totally upset the apple cart of british politics. >> walk us through the parliamentary system here for the american audience. if cameron resigns tomorrow, what are the next steps? >> if cameron resigns the next steps would be the conservative party would have to go through the process of electing a new leader. in the meantime, it would be a question whether cameron would resign when that process ended or if there would have to be an interim prime minister who would end up being asked because you have the involvement of the queen as well as conservative party rules. but it's likely the cabinet would call for a conservative party election, he'd stay through until there's a new leader chosen and then he'd gracefully step out of the way. >> we here in the united states think of resignation at the top of the government, the re resignation of a head of state of being a shockingly dramatic

event, even more dramatic than what we're seeing tonight in the uk voting to leave the european union. talk about the way parliamentary systems grow accustomed to these kind of sudden u-turns. >> parliamentary systems are built on it. the united kingdom just recently introduced fixed-term parmts which is an innovation but that it's very normal for prime ministers to come, prime ministers to go. that in the past couple of decades you've had foin brown stepping down and letting gordon brown take over. because it's about the tenure of parliament, not specifically electing a prime minister for a fixed term. that things are less set and prime ministers will step aside -- >> ben, let's it right there. we're going to cut into itv news. >> ukip has done better in the

past. all areas for leave those were ukip. coastal towns, those are areas we thought would be more likely to vote leave. just look at all that support for leave. all around the coast. all of those key coastal areas we'd identified as being ones to watch. let's look at areas of the country where there were higher proportions of people who were retired and let's just look at how well leave has done. the only areas where remain has done well is in scotland. entirely different reasons for that volt there. let's also look at those areas of the country where there are highest proportions of the population who are white. no those areas of the country that are most white we see almost across the board those votes for leave. then we can also look at areas of the country with the fewest graduates and those areas also being far more likely to vote leave. and again, with the exceptions being cities there and also up in scotland. so that's really the story of what's behind this vote. the ukip vote, over 65s, those

areas where most of the place was white. and those predictors we expected we just didn't see the extent of this coming. and just to understand where these pockets are in relation to areas in the country, let's just focus in on that national picture again. what you can see there, we've been looking at that and studying it. you just see that dense red around the -- that's ukip's heartland. that's where ukip has done very well in recent elections. we expected that very much. but then look at middle england. what we've got there is the east midlands. that support for leave being incredibly strong there. move over to the west midlands where we again see that very dark red there, those clusters of support, places like dudley and talford and worsen and tamworth voting leave in very strong proportions. the northeast above we also see there very, very strong support for leave. and then york shiv and humber as

well. just almost right across the board there. >> okay. we're going to go to plymouth in a minute. maybe we could just talk about that. can we talk about plymouth very briefly? >> plymouth is one of those areas where ukip has done the best. and i have to say, tom, that just really leaves us at this point of the night of having absolutely no doubt whatsoever about how plymouth's going to vote tonight. >> can we just bring up the national picture again? i want to draw out one thing. what's happened in the last hour or two, it seems to me, we've had alex sam mon sitting here suggesting he wants another referendum and scotland might be out. you look at that picture and whether you think he's got a point or not, that's a hard political thing to argue against really when you look at that. and mark mallet telling us that sinn fein want a border poll presumably to talk about the reunification of ireland. politically explosive subject if

ever i knew one. and clear that northern ireland voted to remain. that's the evolving politics of the uk we'll be dealing with. >> northern ireland split on traditional lines it's always been split where as with scottland you have the unified story of a vote for remain. absolutely in total contrast troeft of -- not the whole of england but the marnlth v england. >> it's a very, very fractured picture to say the least. we can go to plymouth. i think we are almost ready -- >> we're back here on msnbc covering the situation where the united kingsdom has voted to ext the european union. going back to ben jacobs, political reporter with "the guardian." ben, we just saw the way the vote broke down throughout the country. and fascinating to see that scotland, where there's a very strong independence movement, to be independent from britain, they voted very strongly to stay

united with the european union. >> yes. scotland almost unanimously stayed with the eu. and the leaders of the scottish nationalist party already saying this calls into question scotland's place in the -- could stay in the european union contradiction continue all the benefits of being in the european union, that it didn't need to be part of the uk for that, and now this reexacerbates that tension because scots enjoyed the ability, it's a major economic boon to trade freely with europe. and it grows the desire for independence there. >> dominic rushe, what do you make of what we just saw in the way -- the vote played out geographically in britain? >> i think it's extraordinary. the map was so telling. in a way what's happened tonight is we've seen part of england, an old part of england by age

voting to grab on to a country that by and large they feel is escaping from them. and in doing that, in voting for this -- >> let's talk about the age for a moment. these people have to have only experienced independence from europe when they were in high school. >> yeah. >> it's been since 1973 that britain has been involved with what was then called the common market. >> yeah. it's extraordinary to me. the benefits that the european union has given. scotland is obviously a very clear example of that. they're voting because they want to be part of this union. they want those benefits. and we're seeing that in northern ireland as well. so in voting to leave we now are in the position where we could lose scotland and northern ireland as well and become an even smaller country. so bizarrely, the irony of it is in kind of grasping for this

kind of larger great britain past we could end up being a much, much smaller country. >> ben jacobs, the issue of northern ireland is different from scotland in that the way the voters are divided there, there's a very strong majority with a very strong loyalty to britain, think of themselves as british and there's a minority think of themselves as irish and that's why it has been this way for most of the 20th century. that dynamic hasn't changed. it seems to me the issue of northern ireland being able to vote for independence is much less likely in the wait vote breaks down there than scotland. >> certainly it's much less likely at this point that, you know, northern ireland has been driven by sectarian tensions for centuries between protestants and catholics, protestants who want to stay in great britain. but the economic dislocation that it's caused could be immense, that northern ireland

for the past 30, 40 years has not had an effective border with ireland. people go back and forth. people trade freely. that it's -- crossing the border, there's no passports. that the dislocation this could cause if there becomes a new bord border, there becomes a new need for passports could become a whole new range of dislocation. and we'd deal with political dynamics because of the peace process. because of the fact there's been some steps toward healing the sectarian divide. it's still strong there. still far less likely than scotland. but it's by no means a slam dunk that northern ireland would stay as a member of the united kingdom if the uk withdraws from the eu. >> dominic rushe, the drama that we've seen tonight is something that is part of the economic equation. financial analysts and people who are measuring economic activity don't like drama. they want days to be very calm from one day to the next because

that's where they can find predictability. try to describe for us what it is like in this world tomorrow for people who don't really have in their calculations a way of processing this drama. >> if you look at what happened this week, if you look at the markets, they start in the uk and you look at what happened with the pound, they started to tick up because there was an assumption that brexit was not going to be a factor. and in fact, if you asked most americans last week what brexit was, they probably thought it was some kind of new cereal bar or something. nobody was really thinking about it. and now -- so there was an assumption that this was going to be meh, whatever, this kind of political row in the uk, doesn't matter. tomorrow morning and as we're seeing tonight we're going to see a big crash in the uk stock markets and maybe this looks like we're going to see a significant falloff in u.s. markets as well.

and that's because these assumptions have been smashed. this vote was always going to be close, but a lot of people in the money markets just assumed the uk would remain and the status quo would stay the same. >> there are ways in which it has always been easier for the uk to exit european union than any other country, principally because they never adopted the currency. they did not give up the pound in favor of the euro. in that sense they always had one foot near the door of the exit. >> yeah. we're an island, and we've remained an island, and we have an island mentality. we've always kind of seen ourselves as apart. but i look at my own family, there's been a big split on the brexit. my father's side of the family, big irish catholic family. many of them have lived in france and germany, et cetera. but there's a big divide between them, and part of it is because they don't like europe.

people in the uk and across europe refer to brussels in the same way that people refer to washington here, disparaging it like a bureaucratic place that wastes too much money and interferes too much in their lives. >> we're going to take a break right here. we'll be right back. real is touching a ray. amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing

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the historic vote tonight in the united kingdom on exiting the european union has been called by our broadcasting partner itv news and several other british networks. the campaign to leave the european union has won. moments ago nigel farage, the leader of the uk independence party, spoke to supporters. >> i hope this victory brings down this failed project and leads us to a europe of sovereign nation states trading together, being friends together, cooperating together, and let's get rid of the flag, the anthem, brussels, and all that has gone wrong. [ cheers and applause ] let's let june the 23rd go down in our history as our

independence day. >> he also had a message for british prime minister david cameron. >> nigel, what's your message to the prime minister now? >> look outside of the window. just look at it, prime minister. the dawn is coming up on an independent united kingdom, something you did your absolute best, you used all your powers to prevent. you did it using every organ of state available to you. you've lost. you've lost the trust of the british people. go. go now. >> he should resign this morning? >> absolutely. >> investors are already reacting to the news in asia, where markets are open, analysts are anticipating volatility in the days and possibly weeks to come. for the latest now we turn to nbc's kelly cobiella in london. kelly? >> reporter: lawrence, we understand we will hear from british prime minister david cameron as well as the head of

the bank of england mark carney within the next hour and a half or so. sometime before 7:00 a.m. local time. hearing from both of those gentlemen. we're also starting to hear from leaders throughout the united kingdom including the leader in scotland and the chairman of sinn fein in northern ireland. northern ireland, by the way, voted about 400,000 to remain in the european union. 340,000 and change to leave. but this morning the sinn fein chairman saying if the uk does leave the eu the british government has forfeited any mandate to represent interests of northern ireland. so obviously a very tense response there. and also from scotland. scotland's first minister this morning saying that the eu vote makes clear that the people of scotland see their future as

part of the european union. scotland voting very heavily in favor to stay in the european union. what you could see now, not only tension in the internal politics in england, in the uk as a whole as well among these different countries. northern ireland, scotland, wales being the only other country aside from england voting to leave the eu. so lawrence, already these political tremors, earthquakes being felt here in great britain. and again, as i said, we expect to hear from prime minister david cameron within the next hour or so. >> thank you very much, kelly. really appreciate it. cnbc and msnbc contributor ron insana is back with us. ron, there is now much talk of a possible recession in the uk. but i just want to remind viewers, nothing happens tomorrow. nothing legally happens. no law changes.

britain will still be part of the european union tomorrow. we've mentioned several times here, it will take a protracted negotiation to finally get to the exit point. it could take years. why, then, why then if in real governing terms involving the relationship with the eu nothing happens tomorrow, nothing happens next month, why then all the anxiety of an immediate economic reaction? >> well, something happened tonight. and just the fact, lawrence, that the entire world market community was caught wrong-footed on this vote and had made big bets that britain would vote to remain in the european union was just dead wrong. polls were wrong. the betting figures out of ladbrooks were wrong. the markets had priced in remain. and now we have brexit instead. and so we're having a very sharp reaction in the markets. but the markets aren't going to wait two years to respond to the disma dismantling of this process that was started in 1957 with the

treaty of rome in the aftermath of world war ii when the the europeans felt it was incumbent upon them to tight economic fortunes of germany and the rest of europe together. this has been long in the making. the fact it is now coming apart raises fears that the entire single currency union will ultimately dissolve. the markets don't wait for these things to happen. they try to anticipate them. they're reacting to tonight's event, but they're anticipating what the potential political economic and geopolitical fallout could be down the road. remember, in addition to economic alliances britain has military alliances with france, with germany, part of the nato alliance with the united states. now economic treaties and other treaties will have to be negotiated separately. on the one hand with great britain and on the other hand with europe, where both were combined up until -- presumably up until tonight. >> thanks a lot, ron. we're going to come back to you. but right now we're going to be joined by phone by steve clem s clemons, msnbc contributor, editor at large.

historic news tonight. >> i think it's a giant inflection point in the world. i just tweeted that the great unraveling that we're going to see hit a lot of global alliances, watching what britain has done here is going to put a lot of pressure on relationships throughout the world, not just in europe but other places. and i think there are a lot of people in the strategic sector who think this vote doesn't hit military alliances and different arenas. but i'm not so sure. when you look at the nato summit coming up in warsaw, when you look at countries of which, you know, england of course is still a nato member, brexit doesn't affect that at all, but it does raise the question of is one nation's security another nation's security? this whole sense of all for one and one for all. and some of these relationships has now been punctuated by britain's desire to exit. you know, this goes back into

american history for a minute. but one cannot think about john calhoun, who was vice president of the united states under andrew jackson, wanted to nullify u.s. government laws and secede, take south carolina and secede from the union. and we ended up having a civil war in the united states about that. it was a lot of tension. now you have the first time in europe, a nation essentially secede. and i think that's going to put a lot of interesting pressure on others that may want to take the same track. so it's a huge moment. >> dominic rushe, i want to go to the issue that's come up about, excuse me, northern ireland and the sinn fein chairman issuing a statement saying that the government has forfeited any mandate to represent the interests of northern ireland. that has always been the position of sinfein. this is not new tonit. sinn fein in irish means "ourselves alone." they have always been opposed to british rule of northern

ireland. and so this is one of those opportunistic moments to make that point again. but the way voters line up in northern ireland makes it it seems to me no different than it's always been on the issue of should we leave britain. the catholic side of that vote has been eager to leave britain for a very long time. they just don't have the numbers to do it. >> yeah. my family's been keen to leave for some time. but i think it's as likely to happen as texas is to secede from the union. but that doesn't mean there isn't going to be an awful lot of pressure brought to bear on the british government now. i think scotland is an entirely different matter because that was a close vote. one of the reasons they stayed is because they thought they could remain part of the eu. and that's gone now. so i think that's a very real possibility. i think northern ireland is a longer, a much longer shot. >> joining us now, susan oaks. she's a senior fellow at the new america foundation and a founder

of the better banking project. susan, on this issue of scotland, might this inhibit an independence vote there? might it actually say wait, this is more risky now than it used to be? >> well, i do think that the scots have an intense sort of pride in being scottish. and i do think the vote was, well, it did look like it was close, it got close at the end of the independence vote in 2014 and thn they kind of pulled back a little bit and they eventually decided to stay. but i think there's a lot of anger, and i think part of the reason that they wanted to stay was because they thought there were benefits to them of being in the broader eu. and they certainly have committed to taking another vote. the scottish national party has said they're going to issue another vote. again, whether that's really going to go forward or not, the uncertainty certainly will raise questions for people. by think the dramatic moves that we see in the markets we're going to see in the markets tomorrow and probably next week may give people paugs in saying

we're not sure we want to be on this island just with great britain, we maybe we do want to stay part of the eu. >> we have some images of tomorrow morning's newspapers in the uk. or maybe we don't. yes, we do. there's the sun. "see eu later." susan, talk about what the actual unraveling would take, what kind of negotiations would be involved, when british voters would be able to see a final deal package of what the exit deal actually looks like. and then might there have to be another referendum that says okay, this is the real deal, it costs this much to leave? >> so there's an article in the european treaty called article 50. so what this vote now is supposed to do is david cameron is supposed to trigger article 50, which starts the process of the negotiations. they have two years to unravel all these laws. there are estimates anywhere from 55% to 70% of uk laws are based on european union laws.

and they'll start to unravel and figure out how their trade would work. right now the eu exports 44% of their exports go to other eu countries. they're a big exporter. that means no tariffs, no trade barriers. that's all going to change. and the -- >> can i hold you right there? why would that change? why couldn't they just continue to have basically a version of nafta, north american free trade agreement, where you've basically kind of eliminated tariffs between canada and the united states, between mexico and the united states? why couldn't they just maintain the trade relationship in. >> because exactly what you were talking about before. the fear that this is going to be the beginning of the great unraveling. so the french, the germans, the european commission itself, president juncker of the european commission is going to say this is final and we're going to make it hurt for you. there are going to be penalties. there are going to be consequences for you to leaving. they can't save political face and let the brits keep all the trade deals that they have.

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♪ "dinner!" "may i be excused?" get the new xfinity tv app and for the first time ever stream live tv, watch on demand, and download your dvr shows anywhere. british headlines on this historic breaking news of the night. the united kingdom voting to exit the european union. there's the "daily mail." i believe we have some other headlines. look at the "mirror." "we're out." these are all very simple

messages. these are not the headlines polls indicated we were going to be seeing today. or tomorrow morning in the united kingdom. but that is where we are now. we're joined now by phone by dean baker. he's the co-director of the center for economic and policy research. dean baker, i'm going to give you that open question i've been giving everyone. your reaction to this historic news. >> well, i was certainly surprised. you know, i was expecting a small win for the no vote, meaning people would vote to stay in the united -- the european union. but you know, the fact it was even close indicated the amount of discontent in uk over the european union. and you know, what we might say here, i'd hope the european union might take away alittle best a lesson from this. again, if anyone had asked me i'd argue against leaving the european union. but the fact is it is really poorly managed.

in particular i'd point to the austerity that's led to slow growth across the european union. a lot of countries have not come close to recovering. countries like greece are still in a full-fledged depression. and this is really by policy. and it's not surprising that you know, when people in the uk look at that they go we don't want any part of that. and people are getting very sanctimonious about the economic harm that's going to happen to the uk because of this. that's not from the uk leaving the eu. it's from the decision of the eu to punish them. so if people want to get sankt mownious about economic damage they should be pointing to the leadership of the european union that plans to both punish the uk and punish the eu. that's the way trade works. if they put up protectionist barriers, they're punishing the eu because they want to make them pay a price. so you know, i think -- again, i wish they hadn't voted to leave. that's not the outcome i wanted to see. but i would hope going forward this might get some people in the eu to do some rethinking about the way they run the european union.

>> dean baker, i think you've isolated what is so difficult about the exit negotiations, that no matter how bitter members of the european union want to be or no matter how angry they want to be, if they want to somehow visit that anger upon the united kingdom it will in trade terms impossible to do that without hurting themselves. >> exactly. and you know, everything that we and they would say about protectionism, it's bad. it hurts growth. what they're talking about is putting up protectionist measures to punish the uk. if you hurt the uk it will hurt the european union as well. >> we're joined now by cnbc's julia chatterly. she is at the headquarters of the european union in brussels. julia, what is the situation there?

>> reporter: good morning. i think it's an incredibly tense northwes environment. this was not expected. they had no official plan in place for what would happen if uk voters decided to brexit. very tense here. i think there's going to be a meeting later on this morning, a crisis meeting to decide what next. but remember, there's a lot of angles here. this is pretty much a 50-50 split with uk voters. half saying they want to remain, half saying they want to leave. so where does that leave negotiations? and i think despite the shock that we're seeing in the global financial markets here, you have to remember that nothing really changes for the next two years during the negotiating period. the uk still is within the eu. and i think we need to remember that when we look at the outcome here. but you know, we've never seen a country leave the eu. so this is a complete unknown for everybody. and i think for these eu leaders and the institutions here in

brussels they don't even know necessarily how to go about this or even who they're going to be negotiating with because for prime minister david cameron of course this result a shock. and you could ultimately see him decide perhaps he's not the right man to lead this country given he was on the opposing side. there's a whole host of unknowns here. >> julia chatterley, what kind of message does this deliver to the eu about the way it has been doing business, about the perception of the incredible growth of its bureaucracy over the decades of its existence? is there any kind of message there that will be received to indicate that maybe they've got to change the way they are perceived, change the way they do business? >> reporter: there is a huge message in this result. and i think it also will fuel populism and those that are also discontented with the way the eu works. so i think the message will be

heard loud and clear. probably the bigger question is how do they react and how can they react. i know you were making a great point about this idea that perhaps the uk will be punished here and they want to send a message to other countries, look, if you want to leave here you're going to get some really tough negotiating measures taken here. but it's a bigger issue than that. there are so many countries that i could name, whether it's france, the netherlands, austria, hungary, all these countries where they're saying, look, actually we're not sure the eu's working in our best interests. so tough for them to be difficult with the uk here when it's a message that's coming from all countries i think in europe that actually something here needs to change and actually this is just the beginning. >> julia chatterley, thank you very much for joining us from brussels from eu headquarters. appreciate it. i want to go back to dean baker who's still with us by phone. dean, to this notion of some kind of revenge being exacted by the eu in the exit negotiations,

the eu could easily find itself if other countries get any kind of encouragement from this about exit or if voters in other countries start to make some demands of their elected officials about exiting or having referendum on exiting, they may find themselves not in as strong a position as they might want to be in these negotiations with the uk. >> that's right. and again, my hope would be is that the leadership in the eu would go okay, this is a serious issue, why is it that first off obviously the people in the uk just voted to leave but you do have this fear that many other countries see it that way. you know, if we had a referendum in new jersey, new york, alabama, pick your state, none of them are going to vote to leave. none of them would even be close. everyone understands the benefits they get from being part of the united states. and i think it would be more

forward-thinking on the part of the european union leadership rather than think how can we punish the people of the uk so no one else should think about leavi leaving, instead say what can we do to change our leadership to people across the europe urbane union realize benefits from it? >> this is a vote that would be much more similar to in the united states voting to leave the north american free trade agreement, which is a rather light version of the european union. and dean baker, that is the position of democratic candidates for president. bernie sanders would like to disband the north american free trade agreement, like to exit it on the part of the united states. donald trump says that we should exit that agreement. it would require a tremendous amount of complexity and legislative complexity here in the united states to do that. but it is the same idea on a smaller scale. >> i actually don't see it that

way. well, a couple things. i don't want to speak for either donald trump or bernie sanders in terms of exactly how they see nafta because to be honest i don't know. they've talked about changing the terms, this and that, but again, i don't know whether they want to get rid of it altogether. they would have to answer that question. but nafta there's never an intention or at least not a publicly stated one to try to integrate laws. we don't have free movement across the borders. the european union is much more closely integrated than the u.s., canada, and mexico have been by nafta under any plausible story would be for decades into the future. we have rules, you know, in the european union everyone has to have a certain amount of vacation, they have rules on minimum wages. there's a whole set of regulations that apply across the european union that to my knowledge no one has seriously proposed for applying across the nafta countries. >> we're looking at a live image from outside 10 downing street, where the pressure has never been higher on a modern british

prime minister. susan ochs, let's talk about this comparison between the european union and nafta. it began in a way similar to nafta, as basically a common market, and it was about economics. it was about making trade as simple as possible between these countries, then moved to let's make travel as simple as possible. eventually you don't need a passport. you won't be checked to go from one country to another. then a common currency. but all these things happened in stages. and as each stage came along the complexity and the bureaucratic complexity got thicker and thicker. >> absolutely. and it had more people join as well. so part of the challenge -- they've got free-flowing immigration, which is again the big issue that's really sparked all of this. i think the other comparison between nafta and the eu, we're kind of the big dog in nafta. right? we sort of know that. even if we don't say that to the canadians. so we have less fear that there are other people that are kind of controlling what happens here in the u.s. part of the challenge with the

uk is they used to feel like they were one of the big dogs but it's gotten a lot harder for them as more people have joined. >> all right. we're going to take a break right here. we will be right back. we know you need wi-fi like you need air. that's why we offer free wi-fi at breakfast, by the pool, even while you're sleeping. you can exhale now. enjoy free wi-fi and free hot breakfast. get up to 20 percent off as a hilton hhonors member at hampton.com.

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afdave stops working, but his aleve doesn't. because aleve can last 4 hours longer than tylenol 8 hour. what will you do with your aleve hours? the votes have been counted in the united kingdom and the united kingdom has voted to leave the european union. it will take years to complete an exit negotiation package. and nigel ferraj, the leader of the uk independence party, has a message for british prime minister david cameron. >> nigel, what's your message to the prime minister now? >> look outside of the window. just look at it, prime minister. the dawn is coming up on an independent united kingdom. something you did your absolute best, used all your powers to