Last week, the European Union experienced the biggest shake-up of the past few decades as Britain voted to leave the 28-nation bloc in an unprecedented move.

Global markets were on an instability rollercoaster as the British pound dropped to severe lows, prompting emergency action from central banks in Britain, the United States and the eurozone.

But with loose monetary policy currently the status quo comes the fear of a negative domino effect. Businesses that rely on higher bank interest rates, such as insurance companies and the pension industry, and savers in fast-ageing societies, are all heavily affected.

It will be hard in the next few years for Europe to focus on trade agreements with the GCC. It will be easier to deal with the British because they will be happy with any friend they can get - right now, in Europe, they have no friends left.

Cornelia Meyer, international economist

The ripple effects of Brexit continue on through Europe and to the Middle East.

With European economic growth set to slow down significantly, oil prices are expected to suffer. To what degree is yet to be seen - but what is clear is that GCC economies are most likely to be affected by this particular knock-on effect.

In Portugal, EU leaders met for the first time in 40 years without any British leadership present - bar Scotland's first minister, Nicola Sturgeon, who is set on carving a space for Scotland to remain in the EU despite of the referendum's outcome. A decision that could very well lead to a split from Great Britain and to an independent Scotland.

Though the UK's decision to vote out hasn't been looked upon kindly by the other member states, the British presence is reportedly very keenly felt. However, one thing was certain as a result of the meeting - any trade agreements with Britain in the future will be tough to negotiate. 

"Access to a single market requires acceptance of all four freedoms, including the freedom of movement," said European Council President Donald Tusk in his address to union leaders. 

Fortunately for Tusk, it appears that both the Brexit camp and the remainder of the EU have been tremendously unprepared for any sort of trade negotiations.

As Europe slowly tries to steady its spinning on the economic axis, foreign markets like China are feeling the crunch.

The EU is China's largest trading partner, leading to the devaluation of the Chinese currency by the largest amount since August. But with a new budding relationship with Russia on the cards, and a clear message of disdain from the Putin administration to the 'leave' camp, where will this current unrest eventually lead China and the rest of the world?

Source: Al Jazeera