It has been the topic of many a conversation, dividing opinion from the people on the street to offices, factories, and homes across the country. Widespread coverage in the media with the nos and yeses receiving plenty of air time and column inches have only served to make predicting the result or even the consensus more unpredictable. The Brexit referendum takes place on the 23rd June 2016.
Let’s take a look at some of the pros and cons of both sides:
Notable Ins: David Cameron, Mark Carney, George Osborne, and Richard Branson
Notable Outs: Boris Johnson, Ian Duncan Smith, Nigel Farage, and Michael Caine
- There will be zero tariffs on imports and exports within the EU single market. Currently, 50% of UK exports go to the EU.
- We have a say on EU trading rules and, as part of the EU, we are also part of any other trade deals with other countries. At present, the EU is in talks with the US to create the world’s largest free trade area.
- Total GDP could lose 2.2% by 2030.
- Many speculate that the UK could lose its status as one of the world’s top financial hubs if it exits the EU, which could lead to major banks (especially US) and financial majors relocating to Europe.
- Car manufacturers could also abandon production lines in the UK as the tax-free EU exports currently in place could be revoked.
- The loss of financial institutions and car manufacturers would result in a severe black hole in UK tax receipts.
- Despite the lack of control over immigration, David Cameron recently won a concession while renegotiating our EU membership. This concession will result in a lower rate of child benefit being given to immigrants, which should lessen the arrival of those looking to come here purely to take advantage of the UK’s overly generous benefits system.
- Potential job losses of 3 million (according to pro-EU campaigners).
- We would no longer be required to contribute to the EU budget. Last year, UK net contribution was £8.8BN, equating to 7% of the government’s annual spend on the NHS or, in simpler terms, £24 million a day.
- We would also be free to negotiate our own trade agreements, meaning a reduction in the usual EU bureaucracy.
- GDP could rise by 1.6% if we were to negotiate a free trade deal once out of the EU. Some commentators believe that the other EU countries would be keen to re-establish free trade if there is a Brexit.
- Barclays offered a worst case scenario analysis that could benefit the UK if we did leave the EU. They say that our exit could see a domino effect within the already fragile EU with many other countries following suit. If this occurred, the UK could then be seen as a safe haven, and we would consequently see a rise in foreign investment.
- We would have control over our borders. At present under EU law, Britain cannot prevent citizens of member EU states coming to live in the UK. Former Work and Pensions Secretary Ian Duncan is firmly in the outs and comments that we are leaving the “door open” to further terrorist atrocities by having such open borders. The former head of the cabinet’s international terrorism team agrees, stating that “by leaving we will again be able to determine who does and does not enter the UK”.
- The Economist recently said some elements of a Brexit would be highly beneficial, like regaining control of our fishing rights around the UK coast. All such rights were conceded when we joined the EU, and due to quota rules, if we fish over our allotment, any extra fish have to be put in a landfill which is a huge waste and makes no economic sense.
The top 3 concerns over staying or leaving of 900 respondents polled are as follows.
|Secure best economic position for the UK
||Secure control of immigration and UK borders
|Support or endorse UK’s EU membership state
||Demonstrate/support UK’s position as a sovereign
|Secure a better deal for the UK from the EU
||Secure the best economic position for the UK
In a number of recent polls, the out campaign appears to be gathering momentum with some polls having them a couple of points ahead and others tied. One important point to note is that those voting out are far more determined and likely to actually head to the polls than the ins and a poll conducted amongst those that definitely plan to vote had the outs ahead 52% to 48%.
Boris Johnson’s surprise backing of the out campaign (seen by some as a political play) had a profound effect on the pound with it falling 2% against the dollar immediately after the story broke. It was sterling’s biggest one-day decline since October 2009. In the in corner, David Cameron and George Osborne have been banging the drum, even roping in Mark Carney, Governor of the Bank of England, to warn of the risks of a Brexit. In big business, Richard Branson and fellow billionaire David Sainsbury are championing staying in, as are the big US banks.
The official campaigning period is from April 15th until June 23rd. Each lead campaign group is allowed to spend £7 million, so expect to be bombarded via all media. As we approach referendum day, current polls suggest the result will most likely still be in the balance, which is having a detrimental effect on sterling as markets don’t like uncertainty. As such, sterling will continue to experience headwinds and possibly trade sideways around current 18-month lows. Until results day, expect increased rhetoric from both sides once the media campaigns are in full swing. Further volatility can be expected in financial markets. All will be revealed in the small hours of June 24th with the overall result being announced by the chief counting officer at Manchester Town Hall.