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28 Dec 2015
UK facing Brexit risk: Should I stay or I go? - RBS
FXStreet (Delhi) – Ross Walker, Senior UK Economist at RBS, suggests that the UK government’s apparent preference for an early referendum – June 2016 has been mooted – seems consistent with its fairly modest and malleable demands for EU reform.
Key Quotes
“Labour migration/in-work benefits remains the thorniest issue but is not obviously insurmountable. Agreement at the EU summit on 17-18 December or shortly afterwards would allow a referendum date to be set and the campaigns to shift into full gear. Polling data have tended to show a small lead (c.5%) in favour of remaining in the EU – our central case – but the polls are likely to be much more volatile than during the Scottish independence vote.”
“The outcome is too close to call with any confidence and this uncertainty is likely to be corrosive. A backdrop of postponed investment, hesitant hiring, sagging stock markets and anxiety-afflicted business activity surveys would not be the optimal moment to commence a rate tightening cycle. A ‘Leave’ vote would trigger wider constitutional upheaval: it could see David Cameron resign as Prime Minister and ignite demands north of the border for another independence referendum – Brexit would probably hasten the dissolution of the UK.”
“There would also be adverse repercussions for the EU, depriving it of its most consistently pro-single market, pro-liberalisation, outward-looking member state, tilting the balance of power in a ‘southerly’ direction.”
Key Quotes
“Labour migration/in-work benefits remains the thorniest issue but is not obviously insurmountable. Agreement at the EU summit on 17-18 December or shortly afterwards would allow a referendum date to be set and the campaigns to shift into full gear. Polling data have tended to show a small lead (c.5%) in favour of remaining in the EU – our central case – but the polls are likely to be much more volatile than during the Scottish independence vote.”
“The outcome is too close to call with any confidence and this uncertainty is likely to be corrosive. A backdrop of postponed investment, hesitant hiring, sagging stock markets and anxiety-afflicted business activity surveys would not be the optimal moment to commence a rate tightening cycle. A ‘Leave’ vote would trigger wider constitutional upheaval: it could see David Cameron resign as Prime Minister and ignite demands north of the border for another independence referendum – Brexit would probably hasten the dissolution of the UK.”
“There would also be adverse repercussions for the EU, depriving it of its most consistently pro-single market, pro-liberalisation, outward-looking member state, tilting the balance of power in a ‘southerly’ direction.”