Wondering why there is such a fuss over Article 50, the so-called EU exit clause? We’ve annotated the Article 50 text to explain the issues in full. (If you’re using Next FT and can’t see the embedded document, please follow this link.) You can read more about the Brexit divorce talks here and here.

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Europe is awakening to a momentous morning. Britain has voted to leave the EU. Sixty years of European statecraft has gone into reverse. Britain’s government is in turmoil. Markets have plunged. Sterling has suffered its biggest fall in 30 years. The uncertainty over what comes next is palpable.

Britain’s vote will transform not just Britain and its place in the world, but spill over into global markets, Europe’s economy, and the balance of power on the bloc. The coming hours will be of historic importance, framing what will be a protracted and difficult divorce. The potential consequences of this vote are hard to overstate. This is the biggest challenge for the continent since the end of the Cold War.

WHAT HAPPENS NEXT — BEST OF THE FT

A Brexit vote that changes everything. The referendum gamble that left Mr Cameron’s career in tatters. Our guide to the world’s most complex divorce. The fallout for Europe and the world. The bumpy road for the British economy. The bitter campaign that divided Britain. The FT live blog. What happens next. How currency markets called this wrong. Brexiters find their fizz. Europe’s populists cheer.

THE MARKET RESPONSE Read more

Some sovereignty obsessed people with little practical economic sense are preparing to make a decision with the potential to seriously spook European markets. And no, we don’t mean the Brexit referendum.

In a few hours Germany’s highest court will rule on the legality of the European Central Bank’s most contentious weapon in fighting the financial crisis. At 10am local time, Mario Draghi’s ‘whatever it takes’ scheme will meet the ‘whatever we say’ of the Karlsruhe.

This is the finale of a long legal saga that has dogged the ECB’s Outright Monetary Transactions programme for most of its 4-year existence. Mr Draghi’s promise to, if necessary, buy unlimited eurozone bonds has never been used, but its effects were palpable. Mr Draghi challenged the speculators to bet against him, and they blinked.

The FT’s ECB watcher Clare Jones does a fine job of explaining the issues and the ping-pong between the Karlsruhe and the European Court of Justice that preceded this decision. The bottom line is that the Karlsruhe has already voiced reservations about the design of OMT – and may today take a stricter line than the ECJ. At worst it could legally hobble the scheme.

The timing is extraordinarily. On an economic level, markets are already fretting over the referendum. The ECB and the Bank of England are preparing to flood the market with liquidity and take some edge off a negative reaction. But if investors seriously turn against the eurozone periphery – as officials in Brussels and Frankfurt fear – OMT could be crucial. Its credibility matters.

On a political level, too, this is an unusually sensitive moment. What are the implications of a national court thumbing its nose at the ECJ on such an important EU policy decision? For decades the Karlsruhe has coexisted with Europe’s highest court in an uneasy legal truce, with each one claiming supremacy and the final say on law but never testing the premise to the point of destruction.

If the Karlsruhe imposes its will – and takes back control, as the Brexiters would say – what will British eurosceptics think? It could certainly inspire some interesting lawmaking in Westminster, even if there is a Remain vote on Thursday.

BREXIT MARKET RALLY

The polls are looking better for Remain. It is still close, but the apparent swing was enough for sterling made its biggest one-day gains in eight years. Read more

Europe’s four most powerful men are in peril, fighting for their political lives in some choppy and unusual electoral waters. Whether this week in the case of Britain’s David Cameron or Spain’s Mariano Rajoy, or in the coming months with regard to Matteo Renzi and Francois Hollande, each one is nearing a career-defining reckoning with voters. The four cover opposite ends of the mainstream political spectrum, but share a common fear: being undone by primal anti-establishment forces. Such is the lot of Europe’s political princes.

David Cameron’s verdict There is a touch more optimism in Downing Street on the EU referendum. After a tumultuous week, poll momentum has swung back to Remain (as well as defections). Mr Cameron also delivered a solid TV performance on Sunday night, channelling his inner Winston according to the FT’s Henry Mance. Note the emphasis on this referendum being a no-turning-back decision on the EU – but not on Mr Cameron. His approval ratings have plummeted but he insists this vote is not a verdict on him. It appears he may try, against the odds, to hold on to power after a Brexit win. Given what it would do to his legacy, what does he have to lose?

Matteo Renzi’s star falls Once the golden-child of this political quartet, the restless Italian Socialist is facing a ballot-box revolt. The Five Star movement routed Mr Renzi in Rome’s municipal elections last night, making Virginia Raggi the eternal city’s first female mayor. In a big upset Turin was lost as well to a 31-year old Five Star insurgent, Chiara Appendino. Mr Renzi’s Democratic party did manage to draw the line there, hanging on to Milan and Bolgna, where it was facing a more traditional run-off with centre-right opponents. All eyes are now on the October referendum on constitutional reform that Mr Renzi said he would win or quit. His enemies are circling.

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Westminster is in mourning. Campaigning is on hold. The grief over the murder of Jo Cox MP is raw and palpable. The implications for Britain at this historic juncture are hard to predict. Six days out from the referendum, in the midst of an angry and shrill campaign, politics has suddenly taken a different hue. This was a dark moment for democracy in Britain and an unbearable tragedy for one young family. Start your reading with Alex Massie of the Spectator on a day of infamy.

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One of the most striking quotes ahead of Britain’s referendum was Michael Gove’s claim that “people in this country have had enough of experts”. As this polling data shows, the Brexit backing justice secretary was on to something, at least when it comes to Leave supporters.

The YouGov pollsters gauged public trust in the views of “experts” and politicians when they speak about the EU referendum. It is no surprise that both Leave and Remain supporters are wary of politicians – both at home and abroad – albeit by different margins.

When it comes to experts, though, there is an chasm. Remain supporters tend to believe academics, economists and people from the Bank of England. Leave backers mistrust them all, especially if they come from Threadneedle Street (net trust minus 45 per cent). You can add business leaders to that list too (plus 28 per cent trust among Remainers, and minus 28 for Leavers).

There is a paradox to this. As the FT’s Chris Giles notes today, there has rarely been such “expert” consensus on an issue. While economists argue over how harmful Brexit would be, there is near unity that it would be harmful to the economy. The dismal science is in speaking in concert for once and the public just don’t seem to be listening. As Tobias Buck found in a report from revolutionary Bracknell, middle England is in an iconoclastic mood. Read more

There are 8 days left of the campaign. Little wonder contingency planning is in overdrive. Three different perspectives are laid out today in the press: from the Leave side on the divorce; from the Remain side on the consequences; and the worried Remain side on last-ditch offers to save the campaign.

First for the Brexiters. Chris Grayling, leader of the House of Commons, outlines a detailed vision of Brexit to the Financial Times. It is a complex but significant insight on how a divorce may proceed, and it doesn’t match expectations in Brussels. The Leave side would legislate in the UK to leave by 2019, but would not necessarily invoke Article 50 of the EU treaty, aiming instead for an “informal” process that sets future trade termsat the same time. In other words, they do not want a trade deal taking longer than the EU break-up. So two years to do it all.

That takes goodwill on the EU side – and it will probably be in short supply. Mr Grayling says the UK will curb the powers of the ECJ straight after the referendum vote – andcurtail free movement rights before 2019 to avoid an influx into the UK. There is not much the EU can do about that; the EU is a sovereign club based on law and good faith. But it may be hard asking for favours. More positive for Brussels: Mr Grayling said budget payments would continue. “I don’t want to break the law as part of the process”. A cheeky European Commission may ask: can we have £350m a week please?

The fiscal contingency George Osborne, chancellor, has set out his post-Brexit budgetto The Times. Unsurprisingly there is no attempt at sugar coating. Income tax up, fuel duty up, inheritance tax up, beer tax up, dramatic cuts across the public sector, all aiming to fill a £30bn fiscal gap he argues was identified by the Institute of Fiscal Studies. The Leave side dismissed this as “hysterical” fear mongering (and think the chancellor will beout of a job anyway). The question is whether it is a sufficiently brazen a claim to move the subject back to the economy, rather than immigration. Remain’s fate may rest on it.

The panic contingency The poll momentum is against Remain and the panic is showing. Tom Watson, Labour’s deputy leader, raised the idea of pushing for urgent reforms to EU free movement – setting off speculation in Westminster about desperate last-ditch measures to rescue the campaignRead more

This is a day of reckoning for France’s union barons. Thousands of protesters are expected to take to the Paris streets again today, seeking to shame politicians into dumping already watered-down plans to reform labour laws. But all that noise may belie a more uncomfortable reality for Philippe Martinez, the union ringleader for the strike. He may have badly overreached.

The gruff, mustachioed boss of the General Confederation of Labour (CGT) said the demonstrations would be “massive”. His reputation is on the line in what Le Journal du Dimanche has dubbed the “final round” of his battle with the government. The New York Times does a smart job of looking at the stand-off. The piece highlights the complex undercurrents in the French labour movement – notably a bloody succession battle to lead the CGT as its fortunes have waned – that are driving militant action in what is ironically “one of the least unionised countries in Europe”.

And here lies the danger for Mr Martinez. The CGT-led strikes have been a costly nuisance but the disruptions don’t seem quite as bad this week. The rubbish in Paris is finally being collected again. The government seems to be standing its ground (albeit to protect far weaker reforms). Public patience is wearing thin. And most importantly, attention has turned to the football – and France won its first game. If turnout is mediocre on Tuesday, what Mr Martinez described as a protest airplane “just taking off” in late May could appear to be running low on fuel.

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The polls are tightening, markets are jittery, and Downing Street is so alarmed it is relyingon Gordon Brown to save the Remain campaign. It may be time to start talking about the day after Brexit, and whether there is a way to engineer a soft-landing.

The “what happens next” issue is tackled today by Donald Tusk, the European Council president, in a typically punchy interview with Bild Zeitung.

“The leave campaign contains a very clear message: ‘Let us leave, nothing will change, everything will stay as before’. Well, it will not. Not only economic implications will be negative for the UK, but first and foremost geopolitical. Do you know why these consequences are so dangerous? Because in the long-term they are completely unpredictable. As a historian, I am afraid this could in fact be the start of the process of destruction of not only the EU but also of the Western political civilisation.”

He later says divorce will be “sad” but manageable within 2 years. But he notes a parallel trade deal – setting the future EU-UK relationship – will be far tougher, and take at least another 5 years after the divorce, if it can be agreed at all. Long as it seems, this 7-year drift is actually optimistic version of the “decade of uncertainty” that David Cameron and Whitehall have described.

If markets react badly to a Brexit vote, there will be huge pressure to find a quick EU fix for a smooth transition (what Wolfgang Münchau calls letting the Brits go in peace). But even under such market duress the political options look poor. Read more

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Voters are growing disenchanted with the EU – and Britain is far from being an outlier. That is the bottom line of Pew’s latest survey, which offers one of the best guides to opinion across the continent. For EU supporters it makes for sobering reading. We’ve picked out four charts.

 

Within the general decline in positive views of the EU over the past decade, one country stands out: France. While French views of the EU have see-sawed over the past few years, there was an extraordinary 17 point drop in respondents having a positive view of the EU this year. Only Greece – not included on our chart – has a more negative view (71 per cent have a unfavourable view of the union).

What explains the slide in support? Any gains that came from economic rebound seem to have been wiped out this year by the migration crisis.

Views of how the EU has handled the situation range from poor (Netherlands and Germany) to catastrophic (Sweden and Greece). Read more

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Alongside Boris Johnson’s Brexit metamorphosis, it must be the transformation of the referendum campaign. For close to a quarter-century, Britain’s control-obsessed Treasury was the EU’s most eurosceptic finance ministry. Yet in recent months it became the go-to armoury for Remain campaigners, churning out ever more harrowing economic warnings on the consequences of Brexit. Whitehall’s broody power centre saw the light – or at least the costs of leaving.

Should Britain vote to stay in the EU, eternal optimists in Brussels – and there are a few left – might take this as a positive sign. In theory, the vote should “settle this European question in British politics” – just as David Cameron promised. The europhile Treasury could lead a mini-renaissance in British EU influence. The UK’s ambitious 2017 EU presidency could press for trade deals and deepening the single market. A multi-tier EU would give Britain the reassurance it craves; London’s defensive crouch on EU policy could end. The Economist’s Bagehot outlines just such an initiative.

Many will find it hard to believe. Read more

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Here comes the digital cavalry. The European Commission will this week weigh-in on the side of business prodigies like Airbnb and Uber, warning European authorities to stop stifling the “sharing economy” with blatantly protectionist rules. It is only guidance. It may well be ignored. But it is a start.

Whereas free-wheeling Silicon Valley tends to see EU regulators as a nuisance or business risk, some companies actively want Brussels to intervene. That is especially true for businesses upending traditional models for selling transport or accommodation. Airbnb and Uber are trying to harness whatever pro-market forces they can to end incumbent-friendly, competition-killing rules from Paris to Barcelona.

By that measure, the Commission guidance is positive for the sector. Outright bans or quantitative restrictions on services are cast as unnecessary and harmful. So, for instance, it is seen as a bad thing to fine Berliners up to €100,000 for renting out their homes on Airbnb. The decision of a Milan court to ban the “unfair competition” posed by Uber probably falls into that category too. Equally hard to justify: a Madrid court ruling asking telecoms operators to disable access to Uber. Read more

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Britain’s administration is now in hibernation. The civil service has entered Purdah – a term derived from the Persian word for curtain and the practice of shielding a woman from prying eyes. In practice in Brussels the pre-referendum asceticism means British diplomats must doggedly stick to their pre-agreed positions, show no flexibility or original thinking and avoid socialising with foreigners. Some EU types may joke: has anything changed?

The polls are looking slightly better for the Remain side. But it is close and European leaders aren’t taking chances. As we report today, Plan B is being worked up: how should the EU respond to Brexit?

The topic has been raised at high levels in Hanover, Rome, and Brussels (all slightly different configurations). Discussions were expected on the sidelines of the G7 too (the communique has depicted Brexit as “a serious risk to growth”). A small group of leaders’ sherpas also met on Monday at the European Commission. And this wouldn’t be a crisis unless the Commission’s anti-populist Martin Selmayr had a Plan B locked in his safe – right next to the Grexit one that was never used. Read more

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What halted the main wave of Europe’s epoch-making migration crisis? Was it the fences of the western Balkans route? Or a transformative deal with Turkey? That is more than just an academic question as Europe wrestles with how to deal with Ankara, and the other policy dilemmas that stem from a world on the move.

This chart, inspired by some conversations with officials in Brussels, attempts to differentiate the two:

The first two lines show the political chain reaction triggered by the Austrians and others imposing quotas on their borders and effectively closing off the western Balkans route migration route. Read more

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By Mehreen Khan Read more

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Austria’s presidential vote on Sunday was billed as a political landmark for Europe: the first election of a far-right populist head of state since the second world war. Then thevote count started. The Freedom party’s Norbert Hofer may still end up in the Hofburg palace, elected for a party founded in the 1950s by a former SS general. But the result ison a knife edge and the Green party’s Alexander Van der Bellen could easily prevail. It’s down to postal votes. Vienna hosted two victory parties last night: a surreal end to a surreal campaign.

Regardless of the outcome, Mr Hofer’s rise is a reminder of some political chill winds in Europe. Other European far-right politicians have not yet come as close to power as the Freedom party. But if Mr Hofer succeeds, it would be possible to trace an arc of illiberal politics through Poland, Hungary (and to some extent) Slovakia and Austria that stretches from the Baltic sea to the gateway of the Balkans.

To varying degrees some of their ruling politicians share a nationalist, anti-immigrant, anti-Islam, anti-EU message. And, for all the grumbling, there isn’t much the EU can do about it. The main question is where populists, the far-right or anti-establishment parties will make their mark next, be it in France, Holland or some day in GermanyRead more

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Gold prices down, sterling sharply up, bookies chalking Brexit at the longest odds since the campaign began (around 3/1). Has the Remain side in Britain’s EU referendum campaign made a decisive breakthrough?

Money is certainly moving against Brexit. A mini-trend of moderately better polls for the pro-EU side was buttressed on Wednesday by an ICM phone survey putting Leave 18 points behind. Referendum campaigns can break sharply as the public begin to seriously engage. Remain campaigners will be hoping this is that moment. Indeed after firing-off their big guns – the US president, macabre Treasury reports, Bank of England recession warnings – they may also be thinking: what took so long?

If a lead is sustained, two factors potentially play a role. ICM picked up a swing to Remain among Conservative voters, with around 60 per cent backing David Cameron’s position. They are still open to changing their minds, but for now the increasingly vicious Tory infighting seems to be encouraging a bit more loyalty to their prime minister. The second is that Remain are faring well on the economic argument – and that is where Mr Cameron thinks he will clinch the vote.

Now for the caveats. The Ipsos MORI poll on Wednesday could be an outlier. And even if it isn’t, why believe it? Pollsters called the last UK and Israeli elections dead wrong. Even pollsters are wary of polls these days. A debate over phone (better for Remain) versus online surveys (better for Leave) rages on in Britain. And in any event predicting behaviour in this vote is hard because there is no good quantifiable precedent. Read more

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Jean-Claude Juncker promised to lead a political European Commission and boy did he deliver. Compared to some politburo-like lifeless debates of the past, his college of commissioners have made a fair few touch-and-go decisions and late-turns (one mini-proposal on visas this month was commissioned and written within 12 hours of the meeting).

Today’s college clash over EU budget rules could be the most contentious yet. The issue is whether to start a process to fine Spain and Portugal for breaching their remedial deficit targets — a sanction never used since the creation of the single currency. What is at stake though is the Commission’s credibility as guardian of the EU’s fiscal regime. How far can it bend the rules?

There is little dispute over the economics. The vast majority of commissioners agree both countries took insufficient action to fix excessive deficits, a judgement that triggers a sanctions proposal. The question is when to announce it, and whether to signal that the fines, once set, may be tiny or indeed zero. Read more

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By Aleksandra Wisniewska

In March, Europe’s leaders gambled their political futures, diplomatic credibility and the lives of hundreds of thousands of migrants on a deal with Turkey.

After two months of raking over the terms of the deal, a simple question can be asked: has it worked on the ground? These four charts demonstrate the good, the bad and the ugly of the situation on the frontline of Europe’s refugee crisis.

The refugee crisis, at least when it comes to the Aegean, shows signs of abating. Arrivals to Greek islands dropped significantly from an average of 2,000 per day to under 100.

This does not mean Europe’s migration crisis has gone away. Read more