Cameron’s failure to renegotiate and / or provoke treaty change is at the heart of this.

 An exit vote is not binding on the government and doesn’t mean that as of 24^th June we are out of the EU. It just means that the government has been mandated by the people to extricate us from Europe. No time frame for doing so, no immediate trade barriers, no immediate change to status quo. The stock markets will probably take a large fall, as will sterling, and the already evident collapse in high-end real estate will be more widely recognised, but these are asset price changes, not changes to the underlying economic machine (with the exception of a sterling fall – which should help exporters).

How will Europe react to an exit vote by Britain? By engaging with the government (Cameron Boris, whoever) to try and turn this around. Renegotiation, treaty change if necessary, addressing the concerns currently being voiced in several countries. The objective will be a second referendum (we have seen this three times: Denmark -Treaty of Maastricht 1992 / 1993, Ireland - Treaty of Nice 2001 / 2002, and Ireland - Treaty of Lisbon 2008 / 2009). Different circumstances, but a precedent nevertheless. Best outcome for all is a second referendum backed by real concessions of the fundamental issues.

 So an “In” vote commits Britain to the status quo, while an out vote may allow a future decision to remain in a better EU, but requires some real brinksmanship. An actual exit is probably just as undesirable as the status quo. All very tactical.

 What the Scots do in the meantime is anyone’s guess.

 Come the revolution.....

David Fuller's view

Many thanks for this very interesting and quite possibly realistic summary, and I enjoyed your conclusion.

EU officials are not unaccustomed to breaking their own rules and making policies on the hoof.  However, in the event of Brexit, I am not sure that Cameron is capable of brinkmanship.  It would require a political Rottweiler.