Today’s “Brexit” vote is a coin toss that threatens to shatter the European Union as we know it and disrupt the global economy. Fluctuating polls are uncomfortably close to 50-50, with the most recent stats showing 44% in favor of a Brexit and 45% hoping to stay.
Analysts believe a Brexit would cause a 40% increase in market volatility and send the S&P 500 down 5%. “I see only negative economic outcomes,” warns US Treasury Secretary Jack Lew. “A Brexit would also put geopolitical stability at risk.”
The Bank of England has labeled the referendum “the largest immediate risk facing UK financial markets, and possibly also global financial markets,” and the Washington Post reports that “Britain’s departure from the EU could send shock waves across the global economy and threaten more than a trillion dollars in investment and trade with the US.”
Corporate America, which employs more than a million workers in Britain, views the UK as a gateway into the rest of the EU. A full third of US sales in Europe occur in the UK. A Brexit would lead to “years of uncertainty,” warns JP Morgan’s CEO as a panicked Wall Street throws hundreds of thousands of dollars into Britain’s “stay” campaign.
Britain’s “Vote Leave” campaign is spearheaded by Justice Minister Michael Gove and former London mayor Boris Johnson, the latter of which has tapped into a public mood of disgruntlement to win support (similar to what Trump is doing in the US). “It’s time to have a totally new relationship with our friends and partners across the Channel,” said Johnson on Wednesday. “It’s time to speak up for democracy, and hundreds of millions of people around Europe agree with us. It’s time to break away from the failing and dysfunctional EU system.”
Johnson’s disaffected Britons are frustrated with the UK’s diminishing influence in the EU and are fed up with the rules and regulations surrounding the ongoing migrant crisis. The “Vote Stay” campaign is backed by half of Parliament’s conservative members and the UK Independence Party (UKIP).
Johnson’s primary rival is British Prime Minister David Cameron, who may find his job on the line if Britain exits the EU. “We are not shackled to a corpse,” he said Wednesday, insisting that that EU is not on the decline. “Please give it everything you’ve got in these last few hours. Go out and vote ‘remain.’”
The “Britain Stronger in Europe” faction believes the UK’s influence will further diminish if it leaves the bloc of nations to which it has belonged since 1973. They worry that a Brexit will threaten economic growth, trade, and national security. Dozens of leading figures from Britain’s economic, security, and cultural elite have joined their voices to Cameron’s pleas. Cameron also finds support from the Scottish National Party, the Labour Party, the Liberal Democrats, German Chancellor Angela Merkel, and US President Barack Obama.
In a rare show of force, President Obama threatened the UK during a visit in April, saying that it would be “at the back of the queue” for future trade agreements with the US if it left the EU. His words were received harshly, but as the UK’s biggest investor he feels that America should have a voice in the decision.
Meanwhile, the EU referendum has become a huge political betting market with Ladbroke’s Matthew Shaddick claiming there is a 76% chance the UK will vote “stay.”
“Investors are piling money into bets on a victory for the “remain” campaign,” confirms Bloomberg. “The pound has surged to a five-month high and European stocks just posted their biggest three-day gain in almost a year.”
Voting began this morning at 7:00am and will end at 10:00pm (5pm ET). Stay tuned for results on Friday!
Editor’s note: To me it sounds like a lot of the British establishment is vested in the EU and are sending out doomsday messages. However I’m not sure its the best for Britain, given the decisions the EU has made recently. The EU requires open borders with the European continent which means terrorists can travel freely. At least they have a vote, we wish them the best of luck.