When it comes to Europe, Britain has always been odd man out. It not only is the geographical isolation of the British Isles from the rest of the Continent that has nurtured this sense of separation. Centuries of cultural difference has made Brits stand apart as well.
Market Roundup
So it was no surprise that, chafing under the yoke of European bureaucracy, the Brits decided to stage a referendum on leaving the European Union.
The “Brexit” vote — as it’s now being called — is set for June 23 and, for a while, it looked like the Brits could actually go through with it. The “Leave” vote was leading the “Stay” by a couple of percentage points, and markets went into shock, sending sterling below the 1.4000 level in panic selling.
The idea of unshackling its society from the endless reams of regulation emanating from Brussels has a certain sense of political romance and certainly some sympathy even among the most ardent Eurocrats. But the cold, hard reality of life is that an economic exit from a union of 500 million consumers would have devastating consequences for the UK economy.
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| Will London and the rest of the UK separate itself from the EU? Polls indicate a Stay vote, but passion remains with the Leave crowd. |
The UK Treasury estimated that GDP could lose 10% in growth over the next few years, and some of the more dire forecasts suggested that GDP would contract by 8% in the first year of independence alone.
Little wonder, then, that after flirting with the idea of independence, the Brits are slowly coming to the realization that they must remain in the EU.
The latest poll suggests that the Stay campaign is nearly 10 percentage points ahead. But perhaps the clearest indication of the confidence of the market is the fact that sterling has rallied nearly 250 points this week and looks ready to challenge the psychologically important 1.4500 level.
So — is Brexit a bust? Perhaps, but there are still 17 million Britons undecided, and June is a long time away. In politics, anything can happen and public opinion can change in a flash.
For now the Brits appear to be voting with their wallets rather than their hearts. But the passion in the debate is clearly on the side of the Leave vote, so the unexpected could still occur.
Since currencies are political as well as economic assets, the placid rise in the pound can change in a heartbeat if the markets sense that there is any threat of a Brexit.
That’s why I remain short the pound as we watch the day-to-day machinations and sentiment changes develop. I believe it’s a limited-risk trade that could pay off big if the Brits surprise the world.
Happy trading!
Boris Schlossberg
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Visa is vowing to reduce the amount of time it takes for customers to pay with its new chip-embedded credit cards.The company said it is upgrading software that will allow consumers to insert and remove the card in two seconds or less.
Currently, users must keep the card in the card reader until the transaction is complete. Current transaction times are up to 10 seconds on average, CNN reports, citing a study by merchant services provider Harbortouch. Consumers that have become used to simply swiping the magnetic stripe on the back of the card have complained about the time it took to use the new chip. Visa insists the new process should “make the checkout experience comparable to the ease and speed of magnetic stripe transactions.”
The tech industry dominates a new ranking of the top-paying U.S. companies, The Wall Street Journal reports. Companies including Alphabet Inc.’s Google, Facebook Inc. and Twitter all pay median compensation of at least $150,000 a year, according to a study by online career site Glassdoor Inc. Techs make up 20 of the 25 highest-paying companies in the U.S. this year, Glassdoor data shows.
In 2015, data for the 15 highest-paying companies in the U.S. showed many of the same tech firms ranked on the list, although salaries were lower. Some big names didn’t make the cut. Apple and Amazon.com figures were lowered on average because their employee bases also include retail and warehouse workers, which bring down the companies’ median pay. Yahoo also wasn’t among the top 25 companies, with its median compensation at $129,940.
Mitsubishi Motors Corp. said its workers improperly manipulated fuel-economy data on at least 625,000 vehicles. “We express deep apologies to all of our customers and stakeholders for this issue,” Mitsubishi said. Major car makers worldwide have been caught making inaccurate fuel-economy and emissions claims. In 2014, South Korea’s Hyundai Motor Co. and Kia Motors Corp. agreed to pay penalties for overstating fuel-economy measures in the U.S., The Wall Street Journal reports. Since last year, Volkswagen AG has been embroiled in a scandal involving devices used to produce inaccurate emissions data in the U.S.
The Money and Markets team
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{ 29 comments }
Boris
The EEC was set up with much fanfare to promote trade opportunities, more flexible tourism and movement between borders and a developing peace between European cultures looking for a sense of trading growth benefits. One unseen cost of this has been another layered bureaucracy in Brussels. There are going to be self interested groups on both sides trying to sway the people’s vote. Prior to the EEC, Britain has stood proudly on its own for centuries. However Britain and others should re-establish their independence for several reasons. Cultural differences, work ethic, bureaucratic dependency between member nations does not work with a single currency. Just as Greece needs to devalue, Britain needs to defend its borders. The people have this one chance to redefine their sovereignty and to me that is becoming more and more a critical issue of security and self determination for many states. The world of successful investing is becoming less certain with many threats on the horizon and the EEC doesn’t have the answers or the solutions anyone can depend on anymore.
Questions for Britain
1. Do you want to use your hard won reserves bailing out dependant progressive societies who don’t work, can’t budget and can’t change.
2. Do you want to be dictated to by Brussels on how many refugees you must take while continuously defending your borders
3. Many countries have reciprocal trade arrangements outside the EEC like China without being dictated to by another arm of government in Brussels
4. Take this chance and regain your countries independence. It doesn’t mean you can’t trade with Europe. You just negotiate from a stance of being independent. The EEC is a failed experiment.
I agree completely with you Howard. The EU concept should have been set up in the first place using Treaties on trade, travel, security, etc.; that way bureaucratic Brussels could have been avoided. Are the member countries really sovereign nations anymore? Not the way things are going. The whole concept of the EU is like wanting to have your cake and eat it too. Sooner or later you run out of cake.
HEAR,HEAR
Britain was never a good fit for the EU for a number of reasons, some cultural, some economic. If the vote is to remain, the subject will come up again. The best thing would be for Britain to leave and then negotiate an arrangement much like one country has a treaty with another except this would be one with an entire organization. If Britain remains, expect Brussels to attempt more onerous rule making that will eventually drive Britain out anyway.
If the Brits want to preserve their sovereignty, they had best “bit the bullet” and GET OUT! While they are at it, they had best get out of the extremely evil UN as well and take all of Britain as well as the Irish ( if they will go ) with them! While we’re on the subject, ” GET THE US OUT OF THE UN AND THE UN OUT OF THE US”!
Sounds like no one is agreeing with you on this big lie Boris. Face it, both the EU and the USA are dying, corrupt empires. The UK has a chance to regain some semblance of self determination. Sadly, just as the British Establishment convinced the Scots to vote against self determination, they will succeed in convincing the British voters to stay with the straitjacket called the EU.
That Liberty and Freedom stuff really scares the hell out people…..
The outstanding men of the last century have to have been Joseph Schumann, Konrad Adenaur and a third whose name escapes me, who came up with the biggest peace process of all time. This month one hundred years ago Irishmen, Englishmen and members of the British Commonwealth of Nations died in their MILLIONS (the start of WW1) fighting a futile war against the Germans and their Allies. The same lunacy was repeated again in 1939 and involved further loss of life from even more nations around the world. The founding fathers of the present E.U. had a vision that if countries traded freely and extensively with each other the chances of them going to war were greatly diminished. Its not long since the outrageous slaughter of innocents in a stadium in Sebrenica took place while the UN peacekeepers were put on a bus and sent home.
Sure some aspects of the red tape factory that is Brussels would leave you depressed and resentful but Britain seems to have embraced lots of this rubbish and enforced it with a zeal that is absent elsewhere. I am in the trucking business and spent the 1980’s on the road all over Europe. I was in Berlin before the wall came down and it was like the 1950’s. The former Eastern Bloc was a glorified Gulag where civil rights were trampled on and the many freedoms Europeans enjoy today did not exist. Travel outside the Bloc was nigh impossible. The British should wave goodbye to their empire and get on with changing Europe from within. Lincoln would have told them “its better to be inside the tent piddling out than outside the tent piddling in”
“Englishmen…died” Why do you feel the need to ignore the contribution made by non-English citizens of the UK? Did you know that there were proportionally more Scottish soldiers per head of population than English in WW1?
Please remember England is not the same as the UK.
James,
This is nonsense the EU has almost caused wars in Europe and certainly not prevented them; its ludicrous rules which have imposed austerity measures has caused immense division and civil unrest in many countries.
The EU has delusions of controlling its own army, whereas the reality is that most member states barely have an Army and have to rely on the security of the USA and to a much lesser extent the UK with its much depleted armed forces.
NATO has prevented wars.
We waved goodbye to our empire 70 years ago (probably the only empire in history to break up with relatively little bloodshed).
The EU will never change us Brits were told a lie from the start, what other trading blocs require open borders and free movement of people as part of the the deal, only the lunatics running the EU asylum.
Peter
The only thing we are sure of is change. As Britain’s colonies became independent so did British power shrink. If Brexit happens Britain will pretty much be standing on its own outside Europe. The first thing to go will be their currency.
The trend is to form into larger economic and political groups. Not the other way round. The US took their time to integrate. Europe is still pretty much a work in progress. Much has been done but much still remain to be done. Either Britain is part of that integration project or she will wilt in the cold Atlantic as a stand alone island.
Even Russia will at some stage realize it cannot stand on its own and need to ally with either the East or the West or face break up.
Just for arguments sake I would take the opposite view. Big states are obsolete, unwieldy, inefficient, being smothered by their own bureaucracies, and spending themselves into oblivion. The human race is tribal by nature and the big nation state has been an artificial and destructive device from its inception. It has served the Elites well but not the people. Their track record since the World War II is also terrible. The small has defeated or tied the big in nearly every conflict. Big powerful armed forces are a complete waste of money and resources in modern warfare. The days of the “big battalions” are over. Look at the two thousand Abrams tanks rusting in the Southwest desert. Just count the number of vibrant separatist movements in the world. The peoples of the world are sick of empires and finally fighting back, and winning. The best current example is ISIS. This small but dedicated group has repeatedly humiliated every big nation state that has confronted it. I would argue that the future trend is the movement of political power back to a more local level. As usual the Brits often lead the way in new trends and the Brexit proponents have it right. Jim
maybe the brits just want out of the eu for the same reason they never joined the euro – they’re better off without them.
certainly
I am not Politically Correct. I am not an expert.
I believe there is great value in Nationalism and Patriotism. And in competition among Nations. And in national cultures. I suggest that the movement to “Unify” Europe will, a century from now, be seen as a grievous error, imposed by Elites who were seeking power, and not the common welfare. The EU needs to be disbanded. Diplomacy has its place, but not a Multicultural Monstrosity. Our Rulers, the Global Oligarchs, have no Patriotism, and consider themselves Citizens of the World. They support “unification”, as it helps them govern. It suppresses democracy and the independence of nations. There are peaceful Muslims in Europe, like the Turks in Germany, who were invited, and are clearly now German. They sought and most appear to me to have achieved assimilation and acculturation.
Sufi Muslims are not only peaceful, but they reach out to Christians and Jews A Sufi leader in the U.S.A. visited some two hundred mosques in the U.S. and testified to Congress that 90% of the mosques were promoting Jihad, peaceful invasion or violent Islamist. Their loyalty is not to the USA, but to Allah, who they obey. Their Islam combines “church and state”, and they comply with Sharia and not with the civil and criminal law of the U.S. and the states. And, if seeking naturalization as citizens, they will lie in taking the oath of allegiance. Allah so orders.
And there are, it appears to me, other peaceful Muslims who can be loyal Americans, including the only form headed by a descendant of Mahommed, the Aga Khan. These are the Shia Ismaili Muslims. They easily integrate. Another are those of the Ahmadiyyah Muslim Commuity. They also easily integrate. (Most other Muslims do not accept them as “Muslims”.) It appears to me that there are a few small groups that also do, including the Alawite and the Druze. There are others that are peaceful but do not generally acculturate, assimilate, or integrate. And they may be pursuing “Peaceful Jihad”, as in Germany and Sweden. They have become the Rape Capitals of Europe.
But Islamists are not peaceful. Many, if not all, are Sunni Salafists, the dominant form (about 40%) in Saudi Arabia. Salafists (aka Wahhabists, but not by adherents) consider Shia Muslims to be Apostates, and deserving of assassination. And over recent decades they have assassinated millions of Shia Muslims.
They have been conducting World War III since before their attack on September 11, 2001. Their enemies are all of the rest of us, including Muslims!
But they give Christians three alternatives.
1. Convert to Salafism.
2. Continue to practice Christianity, provided they voluntarily “submit” and pay the “tax” required of all infidels.
3. Be assassinated. Fair, right?
So, Christians need to know who are assimilating, who are only, but at least, peaceful, though pursuing Peaceful Jihad, and who are our enemies, seeking to kill us.
But at this time, Christians are nearly all OBLIVIOUS!
World War III will continue.
Barry……I agree with a lot of what you say.
However, I think Alternative No. 2 that you mention is going by the wayside. ISIS and al Qaeda are not offering Jizya (a tax mandated on infidels by Mohammad due to their “inferior status”….it is a tax to keep their life). They are moving straight to No. 3.
It all depends on the state of the FTSE in the weeks prior to the vote. If it has topped out about now, as I think it has…… and falls hard into June 23….I think they will leave.
When markets go down and people are lose tons of money….anger flares and social mood goes negative. But, either way, I think it will be closer than the 10 points mentioned.
Federalism endured a long time in the USA because of the way it was set up. The EU did not appear to have followed that example. Unchecked central gum’ment will inevitably render constituent state sovereignty irrelevant, chipping away at individual freedoms along the way. So goes Rome…
Your argument that Brexit is not on the card is very naive. Businessmen , small businesses and economists are viewing this from a realistic perspective and they believe that the UK ‘s position would not be affected as you are suggesting. The U.K. Will still trade with the E U as well as countries outside . The Eurozone is printing billions of “toilet paper” and creating unprecedented debts with weak and unsustainable economies . The social and financial costs of this action are apparent with countries such as France and Italy feeling the strain in areas of unemployment, ghettos and unrest in major cities against the influx of economic migrants and refugees. I live in both Europe and the U.K There is is powerblock within and the U.K is not aligned with that group to command major changes. The threat to leave was very effective and the result of the “so called negotiations ” which took place clearly shows the weakness of the whole structure .
There are essentially two standpoints from which most Brits will view the choice of staying or leaving.
One is the hard headed economic analysis based standpoint which (possibly) suggests staying in the EU because it is a bigger more stable entity than the UK alone. This view believes the EU to be more stable because it is much bigger than the UK alone and is therefore safer.
The other is the self belief standpoint which suggests that the UK is a more robust concept than the cobbled together construct of the EU (and its Euro currency) complete with its poorly controlled borders in the case of the Schengen members. Since it makes little sense in the long run to try to coordinate such a multifaceted construct (Euro or not, Schengen or not) and since the Euro is manifestly in dire trouble and in all probability will continue to have a bumpy ride and the management of immigration in the Schengen system requires ever increasing amounts of policing and construction of more impenetrable barriers than East Germany used to maintain, the self belief standpoint presently appears the more practical and appealing. Were I a gambling man (I’m not) I would be putting my money on Brexit.
As far as I am concerned the sooner the uk is out the better . I am a uk citizen and I look to the future not immediate gratification . Europe is a disaster run by beureaycrats , unelected and incompetent reflecting all western governments . There is most probably some pain on exit but in ten years time we will look back and consider it worth it . U.K. Is flooded by agricultural produce cannot sell so dumped in Britain – kills our industry ( milk production )
We were taken into Europe by an incompetent prime minister – Edward Heath – who had NO mandate . We as a country voted for free trade we did NOT vote to join the common market – Heath decided to take us in .
Right now Britain is under the bed of the USA which unfortunately is going down hill – we are best out
Hi Boris,
I think I can add some fairly unique insight here.
The reason why is that I’ve been following the betting on this. In particular, the betting on Betfair, the UK’s biggest betting exchange.
For those who don’t know what a betting exchange is, it cuts out the middleman and allows bettors to bet against each other. (With the house taking a commission on winning bets.)
So, unlike bookies’ odds, it’s a very efficient market.
That explained, here’s what’s been going on in this market…
– When the date of the referendum was announced you could back brexit at 3.0 – i.e. the market said there was a 1-in-3 chance Britain will leave.
– As the first few weeks went by, the market barely budged. It went up to 3.05, back down to 3… that was about the extent of it.
– In the last week or so, the Bremain campaigners have been running rings around the Brexiters. The Leave campaign’s marketing and messaging have been utterly hopeless. And, as you pointed out, the opinion polls have swung significantly towards the UK voting to stay.
So what’s happened on Betfair? You’d assume they’d be out to 3.5 or higher. Maybe even as high as 4.
But, no, the odds of Brexit have tumbled to 2.8!
i.e. Gamblers in the UK now think that, despite what the polls say, exit has become increasingly likely.
Insanity? Or are they seeing something we aren’t?
Steve Gibson
PS If you need more info on this, just drop me an email. I’ll be happy to answer any questions.
Hi
The EU is busted flush and will collapse within 10 years or sooner.
It is a corrupt, fascist, unelected organisation that has caused chaos in Greece, Ireland and Italy with its arrogant bullying, forcing the electorate to have further referendums until the result suits the EU. In some member countries youth unemployment is C45% as they have been unable to set exchange and interest rates to suit their economy; since inception the EU’s accounts have never been signed off and £billions of taxpayers money has been stolen.
Why would any body want to join an unelected organisation that forces richer countries to prop up their competitors.
The UK is a trading nation and our exports with the EU has been steadily declining over the past few years whilst our trade with the rest of the World is steadily growing.
The ludicrous free movement rule has finally come home to roost as Europe is now being invaded by millions of migrants with probably thousands of Muslim fanatics travelling in their midst; if Turkey is allowed to join it will mean we have to give access to a further 80 million Turks. The UK is a tiny country bursting at the seams why would any sane person
want to be part of this circus, yet all our lying politicians can say is that it will be worse if we leave. Quite frankly they are all quislings who should be incarcerated in The Tower of London as they are allowing this once great country, my country, to be subjugated by an unelected power; not even Obama would give away the USA’s right to govern itself.
Peter Barrett (UK)
I agree with you, Boris that the pound should be shorted, as the average investor is risk-averse and wants to be on the safe side in case the outcome is Britain’s exit. Anyway, uncertainty will definitely dominate the market in anticipation of the final outcome of the vote and panic selling may ensue.
I have no doubt the UK should leave the EU sooner rather than later. I made the mistake of voting to remain in the EEC in 1975. What many in the US do not understand is that the EU as presently constituted, is intent on becoming a Federal State and is using stealth and half- truths to achieve it. The short term economic turbulence which will be engendered by an exit is certainly worth enduring when the alternative is considered.
The EU is a bureaucratic autocracy in which democracy takes second place. The EU rules and regulations which apply to all UK business will slow down the ability of the UK to carry on a vibrant economy trading not just with a sclerotic partner but with the whole world. Only 10% of the UK economy is dependent on the EU and we have a huge trade deficit with it whereas we have a surplus with our other trading partners. British trade with the rest of the world is now more than half of that with the EU and is growing at a greater pace. Currently because of EU rules the UK cannot make trading agreements with other countries and has to apply EU tariffs. We have always made our way in the world by trading and I do not see that changing. Belonging to a club in which the rules are such that they will only be to our benefit by accident does not seem to me a very good idea. Would the US sacrifice its sovereign independence in such circumstances?
Lastly a nation that cannot control its own borders will shortly not be a nation and for that reason whatever the economic out-turn the UK must preserve its sovereignty and vote for Brexit which I certainly will.
As the many above comments by the British attest, this straw poll tells me that Brexit is in the pipeline.
If President Obama recommends to the Brits they stay in the EU then its obvious they should leave. He seems to be only interested in one world under his comrades.
I’m amazed at how many US Americans don’t understand the situation with the EU and it’s simply not just “red tape & bureaucracy”.
To make it more understandable, imagine that Canada, US and Mexico decided to create an American Union (AU) with free movement allowed and the parliament located in Toronto.
The first problem would be the migrant problem which would probably become overwhelming.
Second, you now only have a 33% say in the running of the AU (in Britain’s case they only have a 13% say) and the leaders are not directly elected, but elected by regional representatives in a style similar to that of the Chinese parliament.
The AU parliament will probably be a majority of extreme left wing socialists (the previous President of the European Commision, Manuel Barroso, used to be a leader of the Maoist Communist Party of the Portuguese Workers) who want to now expand the union to include Guatemala, Honduras and El Salvador and the huge amount of money that the US contributes to the AU will be used to help these less developed countries develop their infrastructure and systems so that they can integrate into the union.
Now I ask you, would US Americans be willing to join an AU?