Brexit: Everything You Need To Know - page 2
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UK's EU Referendum: Final 'Opinium' Poll Shows 'Leave' One Point Ahead of 'Remain'
The opinion research agency poll published by the Independent newspaper on Wednesday, showed 45% for the 'Leave' camp, 44% for 'Remain' and 11% undecided.
A TNS online poll, also published on Wednesday, showed 41% supporting remaining inside the EU, while 43% thought their country would be better off outside the bloc, and 16% were undecided.
The betting odds of the 'Remain' camp lengthened slightly on Wednesday to 4/11, indicating a 73% probability that the UK will remain inside the EU after the vote, while the odds on Brexit were 11/4, or 27%.
EU Referendum: Polls Suggest 'Remain' Win as Sterling Surge Eases
The final online poll by research firm Populus for The Independent newspaper showed 55% support for the 'Remain' camp – a 10-point lead ahead of 'Leave' with 45%.
A poll released earlier on Thursday by Ipsos MORI had shown 52% support for 'Remain', while 48% of respondents said they would vote for an exit from the EU.
Despite the polls showing a notable pick-up for 'Remain', sterling slid from the early morning's near-six-month highs to trade 0.65% up on the day at $1.4809 at the time of writing.
Breaking news from Germany showed a gunman attacked a cinema near Frankfurt. The masked man who took hostages on the premises has been reportedly killed by German armed police forces.
Analysts in UK have been warning that any terrorist attack in Europe would have negative consequences on the EU referendum vote in Britain, boosting the Brexit camp.
The identity of the attacker and the motivation behind the attack in Germany is being investigated. The most popular betting odds on the UK vote to leave the EU have drifted out from 3/1 this morning to 9/2 around later afternoon. This shows a probability of leaving the Union of around 18% at the moment, a notable decrease since yesterday.
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In just a few days, it’s conceivable that the European Union’s political and economic future could be reshaped by the UK’s June 23-scheduled referendum vote regarding whether Britain should retain membership in, or exit, the EU. Popularly known as ‘Brexit’ – shorthand for Britain Exit—the vote outcome could have far-reaching consequences for not just the British and Eurozone economies, but also for global currency and equity markets in particular.
Over the course of three articles, published within the next week, we’ll take a deeper look at what the vote means for all involved. Today’s article will examine the reasons for the referendum; Part II, which we’ll publish later this week, will consider the consequences either a remain or leave outcome might have on major currencies; and Part III, which we’ll publish early next week, will detail the affect the vote will likely have on global and UK stocks.
What Exactly Is the European Union?
The European Union (EU) is an economic and political union of 28 free states, located primarily on mainland Europe. Each member state acknowledges, upon joining the EU, that they have entered the international treaties covered by the Union of their own free will, without being forced to do so by a third party or superpower. The Union’s strength – and ironically its fragility – comes from that very fact.
Under Article 50 of the EU treaty, "Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements". To date, none of the EU’s member states has ever elected to leave the Union, while the waiting list to join the EU is lengthy. A decision by the British people to become the first country to leave the EU could have ramifications not only for the UK's future, but also seriously tarnish the EU's prestige and political power.
Prior to the European Union’s founding on November 1, 1993, Britain was part of the much smaller European Economic Community which it joined in 1975. The EEC—often referred to as the Common Market—had 9 member states and was primarily a trading arrangement.
Similar to the EEC, the European Union represents a single market for its member states. But unlike the earlier accord it has evolved into a much broader—and more political—entity that’s headquartered in Brussels, Belgium and along with trade-related issues, legislates over immigration and visa issues as well.
For many in the UK, that’s at the heart of the current problem.
Why does part of the UK want to leave?
Reasons vary. Politically, some citizens are concerned about the ever-growing power of the EU over its member countries. The EU has exclusive legislation power over areas such as common commercial procedures, transport policies, even rules of competition. This essentially means member states no longer have the right to introduce their own legislation in these areas, which many see as weakening individual sovereignty.
Economically, some believe that the free movement of people and goods—a core principal of the EU—is hurting Britain's own economy, as its government is unable to control the influx of migrant workers into the country, and businesses are free to move elsewhere in the EU at will. The border control argument, which has been going on for a number of years now, has gained greater traction recently and is now also being used in a security context, since some believe that disengaging from the European Union's policy towards the Syrian refugee crisis would benefit UK security.
Additionally, the UK contributes billions to the EU budget but gets quite a bit less in return. How much less is the subject of fierce debate. According to fullfact.org, the UK pays an annual 13 billion pound sterling in fees (approximately $18.4B), while it gets back approximately 4.5 billion pounds (approx. $6.4B) in EU spending on the UK, leaving the balance at minus 8.5 billion sterling (approximately $12B) for the UK.
Why would others want to stay?
Of course, those who wish to remain in the EU have their own set of arguments.
Politically, they want to stay in the EU because they believe united, each member country is stronger than it would be on its own. The EU has always seen itself as a global superpower, a status that currently would be unattainable for any of its individual member countries.
Indeed, while the UK, Germany, and France have far-reaching political influence in many different parts of the world, each could not rival the US’s foreign policy clout on their own. This argument also serves stay supporters when discussing security issues, as they believe that strength in numbers is crucial for dealing with future threats.
Economically, EU member countries are able to export within the EU at no cost, boosting sales of British products to mainland Europe. The EU is also able to negotiate better trade deals, as access to the entire European market is an attractive proposition for external trading partners.
Stay supporters argue that the UK will never be able to negotiate better terms on its own. For example, the TTIP, Transatlantic Trade and Investment Partnership, which is currently under negotiation between the US and the EU could become the biggest trade agreement ever formed. Should the UK leave the EU, it would have to negotiate on its own, for better or for worse, depending on one’s perspective.
Finally, while immigrant workers are seen as detrimental to the British economy by supporters of the leave faction, those who wish to stay claim young immigrants help spur growth which will only strengthen the country's economy.
Macro vs Micro
Everything discussed so far concerns the macro economy. But is there a way to prepare your individual portfolio for a possible Brexit? Yes and no.
It’s impossible to foresee all of the different ways 'Brexit' could affect one’s personal investments. However, there are ways to guard against—as well as hedge against—the possibility of a UK exit.
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Brexit totals: 6,450,417 leave 6,132,569 remain
Leavers really stretching their lead now
It's going to take some big remains to pull this back.
We've still got a lot of London and the South East to go and big areas like Manchester and Leeds.
What's the chance that UK doesn't Brexit after all?
Nordea says it's 30%
Analysts from Nordea on scenarios after the Brexit referendum:
In Q4 2016, the new prime minister triggers Article 50 of the EU Treaty by notifying the EU that the UK intends to leave. That opens a two-year window for negotiating a withdrawal agreement. But it seems unlikely that the ultimate relationship between the UK and the EU will be agreed within the two-year timeframe.
Background: Last week PM Cameron said he would step down in the autumn and leave it to the next prime minister to decide when to notify the EU about the intention to leave. A likely leadership battle within the Conservative Party could delay the government's invoking Article 50. Moreover, the new PM and his cabinet will need time to come up with a coherent plan for the future relationship with the EU (no such plan exists at this point). This could postpone the notification until early 2017, a risk which would be aggravated in case of an early general election in the autumn.
The EU referendum was advisory and non-binding. Thus, the UK's next prime minister is under no legal compulsion to act on the result. A new premier could, in theory, go back to the EU and ask to negotiate a new deal before taking it back for a second vote. But this option has been ruled out by EU leaders. Moreover, it would be very difficult to ignore the views of the 17.4 million people who voted to leave. Thus, the minimum requirement would probably be a general election victory for a party that had promised explicitly to think again.
Scenario 1: Brexit and free trade agreement (70% probability)
Although EU leaders are pressing the UK to move quickly, only the UK can decide when to invoke Article 50. In other words, the EU cannot force the UK to do so.
]The UK will try to negotiate a tailor-made free trade agreement (FTA) with the EU. Due to the mutual economic dependency between the UK and the EU, the UK will eventually, after several years of negotiations, end up with a deal which ensures continued access to the EU internal market, including services. But UK companies, including financial institutions, will get somewhat less access than they have today. But for an extended period after the notification it will remain very unclear for financial market participants what type of post-exit arrangement (Norway/EEA model, Swiss, Canada etc) the UK will end up with. If the two-year negotiation period comes to an end with no deal, it can only be extended by a unanimous decision of the other 27 EU countries. If there is neither a deal nor an extension, the UK leaves automatically and trades with the EU countries on WTO rules. Any EU deal with the UK must be approved by a qualified majority of 65% of member states.
Scenario 2: No Brexit, return to status quo (30% probability)
We assign a probability of 30% to the following political risk scenario: Brexit will never happen - the UK will never trigger Article 50. Background: Due to adverse developments in financial markets and the economy plus mounting concerns about a dismantling of the UK, the new PM and his cabinet will have second thoughts about the commitment to accept the EU referendum. This could trigger a Brexit vote in Parliament or a general election, in which the government advocates a renegotiation with the EU. The longer Article 50 is put off, the greater the chance it will never be triggered. With a delay in triggering Article 50 to the end of this year, or possibly longer, the anti-Brexit movement within Parliament is likely to gain ground. Ahead of the Brexit vote, the majority of MPs favoured staying in the EU.
Brexit - is the UK in for a constitutional crisis and what that would mean
In the aftermath of the Brexit vote you know how everyone on social media has turned into a constitutional law expert?
Brexit - British businesses launch legal challenge to Brexit
A legal challenge has been launched arguing the government would be violating parliamentary sovereignty if it activated Article 50 on its own
London Law Firm Says Brexit Can’t Happen Without Parliament Vote
Mishcon de Reya, one of London’s biggest law firms, said it’s representing a group of unidentified clients threatening to take legal action against the British government if it tries to initiate the process of leaving the European Union without consulting parliament.
The formal start to Brexit talks is likely to be the triggering of Article 50 of the Lisbon Treaty. Mishcon de Reya said in a statement that this process can only be started with parliament’s consent. The U.K. government’s position is that it’s a decision for whoever is prime minister after David Cameron tendered his resignation.
“The result of the referendum is not in doubt, but we need a process that follows U.K. law to enact it,” Kasra Nouroozi, a partner at the firm, said in an e-mailed statement. “Everyone in Britain needs the government to apply the correct constitutional process and allow parliament to fulfill its democratic duty, which is to take into account the results of the referendum along with other factors and make the ultimate decision."
The firm, which said it is acting on behalf of a currently anonymous group of concerned clients, has retained David Pannick, Tom Hickman, Rhodri Thompson and Anneli Howard to act in the matter. The law firm said it has been in touch with government lawyers since June 27 to “seek assurances that the government will uphold the U.K. constitution and protect the sovereignty of parliament in invoking Article 50.”
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Histrionic headline award: GBP becomes more unstable than Bitcoin following Brexit
The screaming, hysterical headline:
UK Parliament to debate Brexit petition
The much talked about Bregrexit petition started by all the bad losers will enter Parliament for discussion
The Commons Petitions Committee has confirmed that they will be putting it forward for debate after over 4 million signed it.
The committee had also been working on weeding out any dodgy signatures.
The Evening Standard report the petition will be discussed September 5th.
It's a potentially small risk for the market as it's very doubtful that anything will come of it.