In an article written by Ruchir Sharma and posted by the British newspaper, The Guardian, Brexit is expected to be contagious to the extent of introducing the era of de-globalization.

In an article written by Ruchir Sharma and posted by the British newspaper, The Guardian, Brexit is expected to be contagious to the extent of introducing the era of de-globalization.

What follows is the complete article:

In among the shock from the EU referendum result, the risk of contagion was raised. Analysts asked which EU country might leave next and whether this unraveling could shatter the postwar European order. A month later, it’s clear that Brexit was less a cataclysmic cause than a symptom; a manifestation of global forces unleashed by the 2008 global financial crisis, including slower growth, rising inequality, and a widening backlash against open borders and incumbent leaders.

Inside Europe the political earthquake is receding, with the installation of a new UK prime minister who, ostensibly, did not want to leave the EU. Yet even if Brexit does not herald the unraveling of Europe or of the global economy, it is the most important sign yet that the era of globalization as we have known it is over. De-globalization will be the new buzzword.

The world has entered what I call the AC era – after the crisis of 2008. It is already marked by much more upheaval than prevailed in the era before the crisis, and many of the policies and leaders that nations have embraced, hoping to ease the pain, have only made matters worse.

Worldwide, an anti-establishment revolt has been raging since the crisis. In 30 of the major democracies, the incumbent has been winning in as few as a third of national elections each year since 2008, down from two-thirds before that year. In the 20 top emerging and developed nations, the median approval rating of the incumbent leader has fallen from a high of 54% in the years before 2008, to just 37%.

Anger at incumbent governments is now widely seen as a boon to rightwing populists such as Donald Trump, Marine Le Pen, and some of the leaders of the Brexit campaign. This, however, is a revolt against the establishment, not an ideology, left or right.

In Europe and the US rightwing upstarts are exploiting the frustrations of the working class by blaming their woes on immigrants stealing jobs. But there is no such widespread rise of the populist right in Asia or Latin America, where voters have been toppling leftwing governments in favour of mainstream reformers like Mauricio Macri of Argentina, and Pedro Pablo Kuczynski of Peru. A former World Bank economist ,whose first promise to Peruvians was to rebuild “consensus”, Kuczynski is about as far from angry populism as a president can get.

The ballot-box revolts are not isolated, local events. They have sprung from slow growth in the global economy, which has fallen since 2008 from its postwar average of 3.5% to just above 2%, the level that feels like a global recession. This is the weakest recovery of the postwar era, and until recently Europe was the hardest-hit region, having suffered not one but two recessions since 2008. It has thus been fertile ground for popular anger.

The popular frustration is amplified by rising inequality. To fight the global slowdown, central banks have been pumping out easy money. Instead of fuelling wage and job growth in the real economy, as intended, much of that money has found its way into financial assets, including stocks, bonds and housing – pushing prices to record highs. Because the rich own most of these assets, inequality is widening and spreading, and wealth is massing in financial capitals like New York and London. The period since 2008 has seen weak wage growth but spectacular returns for the wealthy: in Britain, wages are up 13%, but the stock market is up 115%.

This story repeats itself in country after country. In a recent study of 46 major economies, Credit Suisse found that prior to 2007, wealth inequality was on the rise in 12 of them; but after 2007, that number more than doubled to 35,.

In that brief span, the world population of billionaires nearly doubled to more than 1,800. More than 70 of them live in London – one of the highest concentrations in the world – making the British capital a ripe target for class resentments. In England proper the Brexit vote was, in large part, a vote against London, its globalised elite, and all they stand for, including free trade and open borders.

Here too, the British revolt is less a turning point than the latest flashpoint for the negative passions of the AC era. In late 2008 the G20 gathered at a summit and vowed not to engage in the kind of trade wars that extended the Great Depression. Then they went back home and have since imposed hundreds of new barriers to trade. This bout of protectionism has helped to slow growth in global trade from better than 8% before the crisis to near zero. Britain has turned inward too, imposing more than 200 new trade barriers after the global financial crisis – third most in the developed world after the US and Germany, according to the Centre for Economic Policy Research.

The hype for globalization that excited the era before the crash has given way now to fears of de-globalization, and the measures governments have taken to buffer economies against another crisis have only deepened this self-destructive trend. Driven in part by new limits on their overseas activities, global banks have pulled back to within their home borders. Global capital flows fell from a peak of 16% of global GDP in 2007 to just 1.6% – a level last seen in the 1980s. This retreat will act as a drag on economic growth, suggesting that every country needs to downsize its ambitions, or face new outbreaks of frustration.

The anti-immigrant movements that have gathered pace are the latest proof, and they come at an inopportune time. In countries rich and poor, women are having fewer and fewer children, a trend that predates the crisis of 2008. Since 1980 the number of countries with a shrinking population of working age people has risen from 2 to 38. And one of the only ways for any country to counter the economic shock of depopulation is by attracting immigrants.

In fact, Britain’s workforce would already be in decline too, were it not for relatively strong net migration, which brought in 900,000 people over the last five years. Though the challenges of assimilating foreign workers are real, so are the economic consequences of barring them: fewer workers will mean less growth.

But perhaps this outcome is unavoidable now. In the decades before 2008, the world economy expanded at it fastest pace in recorded history, thanks in part to greater freedom of movement for goods, capital and people. Unfettered globalization lifted millions of people out of poverty in the emerging world, but it also frayed the social fabric of many western nations. Brexit is just one manifestation of the anti-globalization backlash in the post-2008 era. The champions of that backlash are pushing policies that are likely only to exacerbate the global economic slowdown.

But the message from Brexit and similar movements is clear: economic growth may have to take a back seat while political leaders work to address the anger of those who believe that globalization has left them behind.