Brexit will cause problems for Britain's economy

In the short run, uncertainty about Britain’s future relationship with the EU, its largest trading partner, could push the UK into a recession. Market watchers predict an "explosion of volatility" on Friday morning as the markets process the implications of Britain’s exit. Many economists expect both the British stock market and the pound to open lower on Friday morning. Britain’s chancellor of the exchequer, George Osborne, even hinted that he could suspend stock market trading if Britons voted to exit the EU.

In the long run, the situation could be worse. If Cameron’s government falls, Britain’s prospects of negotiating a favorable deal with the EU could be weakened. The EU may decide to strike a hard bargain to discourage other countries from leaving the EU. Or the UK’s new leader might not be willing to accept the kind of restrictions that come with a Norway-style deal.

And that could create serious problems for businesses based in the UK.

"If you are Nissan or some other car producer with major production in the UK, today, the same safety standards and environmental standards allow you to sell everywhere in the European market," Jacob Funk Kirkegaard, an economist at the Peterson Institute for International Economics, told me. But if the UK leaves the EU, "you would no longer be able to sell into other European markets, not because you face a small tariff but because you'd have to go through another set of safety certifications. This kind of thing would be repeated in every industry you can think of."

Critics say the economic effects could be large. The UK government has estimated that exiting the EU could cause the British economy to be between 3.8 and 7.5 percent smaller by 2030 — depending on how well negotiations for access to the European market ultimately go. Other reports have found smaller but still significant impacts.

Brexit: what happens when Britain leaves the EU - Vox