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Will Brexit spur an exodus from the EU?

Brexit market mayhem

The shock of Britain's Brexit is yielding to worries populist anger could inspire similar votes in other European countries. The fear, experts say: A cascade of departures from the European Union in the coming years that rocks the global economy, disrupts financial markets and rattles the post-war political order.

Rising nationalism fueled by economic stagnation, high levels of immigration and political extremism may pose an existential threat to the EU, a 23-year-old alliance aimed at a fostering an economically and politically integrated Europe.

"If pro-Europe's governments listen to their voters, and grant them a referendum, governments may hear a 'Leave' message," wrote Robert Rohrschneider, a professor of European politics at the University of Kansas in an op-ed following the Brexit. "If they do not grant the referendum, they may be replaced by anti-EU elites. Either way, Brexit may well be only the beginning."

Time editor on Brexit's impact on the U.S. and the 2016 race

Poll numbers suggest similar levels of EU dissatisfaction as in Britain in several other countries, including the Netherlands, Italy and France. Political parties that are nationalistic, anti-immigration and hostile to the European Union are gaining support all over Europe.

And populist politicians, including Dutch anti-immigration crusader Geert Wilders and French National Front party leader Marine Le Pen, moved quickly after Brexit to call for what some are calling a "Nexit" and "Frexit" from the EU.

"The EU was created in order to provide prosperity for all of Europe and, in particular, bring the smaller countries into the orbit of the economic strength that Germany represents. Well, it failed miserably," said Robert Shapiro, a fellow with the Center for Business and Public Policy at Georgetown's McDonough School of Business and formerly Under Secretary of Commerce for Economic Affairs in the Bill Clinton administration.

Alternatively, disaffected voters elsewhere in Europe may temper their anger at the ballot box after watching Britain's pound tumble, stocks crater, credit agencies threaten downgrades and economists warn of imminent recession in the U.K. The chaos and dire predictions after the June 23 vote even spawned an online petition, dubbed Regrexit, that has collected 3.7 million signatures in favor holding a second referendum on whether the country should leave the EU.

Immediately after the vote, fellow states in the Europe Union threatened to hold a hard line on Britain, with some officials pressing the UK to quickly start formal deliberations for exiting the EU, a process known as Article 50. That stance, which experts say would likely heighten Brexit's economic fallout, seemed like a warning shot for other countries inclined to bail from the 28-member union.

Meantime, Scotland, which voted strongly in favor of remaining in the EU, set in motion a move toward independence, and Northern Ireland may follow suit. Although such moves are not a foregone conclusion -- Scotland would need London's permission to hold a referendum on indepenedence -- the divisions have conjured up the once remote possibility of the U.K. breaking up.

U.S. markets expect more turmoil over Brexit vote

German Chancellor Angela Merkel struck a more conciliatory tone. Her country's finance ministry suggested making the UK an "associated partner country," and warned that France, Austria, Finland, the Netherlands and Hungary are at high risk of following Britain out of the EU.

Rohrschneider, a visiting professor at Pembroke College at the University of Oxford, adds a sixth country: Denmark, which has a strengthening right-wing party that questions the value of EU membership. The fault lines in other states are also visible.

Hungary is led by euroskeptic Prime Minister Viktor Orban. In France, which will a national election next year, the surging popularity of the nationalist, anti-immigrant National Front party has turned Le Pen into a leading presidential candidate. In the Netherlands, Dutch Party for Freedom founder Geert Wilders is a "very strong and charismatic leader" who has mobilized anti-immigrant sentiment while steering away from traditional right-wing parties, Rohrschneider said in an interview.

An important factor that could affect whether other nations follow the U.K. out of the EU will be how the remaining member states deal with the new British government, Rohrschneider predicted. He's also not convinced the ugly market reaction to Brexit will tamp down nationalistic fervor in other countries, noting that mounting economic pain could make European voters even hungrier for change.

"If they continue to simply lambaste the British voter, that may just mobilize right-wing populists," he said. "For 15 years the only question for me was when would the EU would implode, not whether [it would]. Britain is the impetus and it simply galvanizes a number of issues."

London-based research firm Capital Economics puts the odds on the Netherlands as most likely to follow Britain with a referendum on abandoning the EU. That's based on polling that suggests Euroskeptics in the country would capture 57 percent of the vote in elections scheduled for March 2017. By contrast, only 25 percent of respondents in another poll were bullish on their own country's prospects of going it alone, Capital Economics noted.

Global market fallout following UK Brexit vote

Other countries in Europe with significant public opposition to the EU include Italy, Sweden and Greece. Sweden, which along with Denmark is historically a strong British ally in negotiations with other members of the EU, could be vulnerable to an exit vote, having seen anti-EU forces gain a political foothold.

The situation in Greece is different. Greeks are unlikely to vote to exit the EU, which is acting as an economic life-line as the country struggles to recover from the 2008 global financial crisis. But an EU with fewer members could view Greece as a liability it can no longer afford.

The Brexit vote was an earthquake for establishment assumptions, said Anatole Kaletsky, author of "Capitalism 4.0" and co-founder of Gavekal Economics. One such assumption under assault across Europe -- as well as in the U.S., as demonstrated by the success of Donald Trump and Sen. Bernie Sanders in the 2016 presidential campaign -- is faith that free markets are inherently beneficial.

"That's at the heart of this populist upsurge," Kaletsky said in an interview. "There's a sense that the 'market is always right' is no longer a convincing answer because, as we learned in 2007-08, the market is sometimes catastrophically wrong."

In a research note, Kaletsky said the aftermath of Brexit could range from a tightening of ties among remaining EU countries to, on the opposite end of the spectrum, a total fracturing of the union. At minimum, the credibility of EU efforts to address the euro crisis "will be severely tested and questioned by the markets -- and even more importantly by the cities of all these countries," he said.

"The political impact of British withdrawal on other EU countries is potentially huge and also totally unpredictable," he wrote.

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