Sunday, June 19, 2016

The U.K.- Will it Stay or Will it Go?

Last week, as the June 23 vote by U.K. citizens to determine if they want to leave the European Union, a process referred to as Brexit, Prime Minister David Cameron said: “Here are five key reasons why I believe you need to vote to remain in a reformed European Union. 

  1. Jobs. British businesses rely on our deep links with Europe. Over 3 million jobs in the UK are linked to exports to other EU countries.
  2. On leaving. No alternative would give firms full access to the single market, without accepting immigration from the EU and paying into the EU budget. Every alternative would mean years of negotiations, uncertainty and risk for Britain.
  3. Travel. The EU delivers lower prices for Brits. The price of flights has come down by 40% and the cost of using your mobile phone in Europe by almost three-quarters.
  4. Trade. The EU is the UK’s main trading partner, worth more than £500billion a year – that’s half of our total trade in goods and services.
  5. National Security. The EU helps us to co-operate on crime and security. The European Arrest Warrant means over 7,000 suspects have been removed from the UK and we’ve been brought over 1,000 back to face justice here. 
  6. Jobs. British businesses rely on our deep links with Europe. Over 3 million jobs in the UK are linked to exports to other EU countries.” 
Note: while some surveys have suggested that a majority of UK citizens prefer to Leave the European Union, a NBC News/Survey Monkey U.K. poll last week reported that 48% of Britons want to "Leave" the EU, 48% want to "Remain" and 4% are undecided.

MY TAKE
  • While a “Leave the EU” view may be driven by concerns about immigration, globalization and unemployment trend, recent Google Trends data suggest that voters may be confused - with top U.K. Google searches including ‘why should we leave/stay in the EU?’, ‘what will happen if the UK stays or leaves?’ and ‘what is ‘Brexit’?’.
  • Leave vote will likely trigger short term market volatility across many international markets, while weakening the structure of the European Union.
  • Bottom line: Global investors, business leaders and policy makers are all focused on the outcome of the June 23 vote. 

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