Brexit on the cards?

The referendum was watched closely - and not only by countries which share the common currency. Ever since the UK's Conservative Party was re-elected in May, the question of EU membership has been high on the political agenda. In a bid to appease restive Eurosceptic backbenchers, Prime Minister David Cameron has promised to hold an in/out referendum on membership of the EU by the end of 2017. Cameron favors staying in the EU but reforming the institutions and treaties. He has spent weeks meeting with other European leaders to rally support for his programme of reforms. But the multiple crises of Greece, migration, and tension with Russia have all conspired to make Cameron's reforms a low priority in Europe.

"At the moment, there are very few people in Brussels with the head space to think about the UK and what these reforms might entail," says Fabian Zuleeg, Chief Executive of the European Policy Center. "Once the crisis is over, there will be a focus on this. It makes it rather unlikely that we will have the reform agenda pushed through quickly, because you would need the political fire power of the big players in the system behind it - Germany, for example, would need to commit time and effort, and Germany is preoccupied with Greece. But there is still some time before the British referendum - if we can find a solution which doesn't involve Grexit, the current crisis might not have such a big impact on the UK."

EU exit?

Yet many analysts believe that Greece's "no" vote could empower those lobbying for a British exit from the EU. "The no vote brings a Grexit closer. But Grexit cuts two ways for David Cameron," explains Rem Korteweg, senior researcher at the Center for European Reform. "The threat of Grexit could strengthen his hand during the renegotiation of the UK's EU membership: Grexit increases the need for changes to the EU's treaties, particularly on euro-governance, which helps Cameron make the case in Europe for serious reform. But some in Britain will see the possibility of Grexit as proof that the EU is a mess, and that the UK should leave, making it more difficult for Cameron to convince Britons to stay in. Eurosceptics stand to benefit most from the current situation."

The way that the Greek crisis has played out, with mutual recriminations and brinksmanship taking the place of the compromise that was supposed to characterize the European project, has shaken confidence across the board. "For the first time in my life, I am beginning to wonder whether the European project is now simply too broken to be fixed," says Greek-born actor and writer Alex Andreou.

"I am passionate about the notion of a Europe of partners, united around principles of solidarity and trade. I just think we have taken so many wrong turns that I feel very uncertain as to whether we can ever find our way back. I am not alone in feeling like this and it is not of consequence only with regard to Greece. I have had numerous messages in the last few days from pro-European friends here in Britain, telling me that the way the institutions have treated Greece, have convinced them to cross over to the 'out' camp for the forthcoming UK referendum on European membership."

Business fallout

The ongoing crisis also has consequences for British business. "With the no vote from the Greek people the crisis has entered a new stage. It's very hard to predict what the outcome will be, but if Greece does leave the euro, British businesses do not think they will escape the fallout unharmed," says Simon Walker, director general of the Institute of Directors. "They worry that a Grexit would be messy for the rest of the eurozone, creating turbulence in financial markets and putting pressure on other Mediterranean countries whose economies are also weak."

The result has highlighted fundamental questions, debated across Europe, about the nature of the political union. "The EU is going through a difficult period," says Korteweg. "European integration was once considered a one-way street, but yesterday's events show that it could become reversible. This has an impact on the EU's credibility in Europe and abroad. If Greece leaves the euro, the obvious question is 'who next?' Add to this the threat of a Brexit, and European weakness becomes clear."