The UK Votes Tomorrow whether to Exit or Stay in the EU; UK Polls are Split Down the Middle
In less than 24 hours, the UK will vote whether or not to stay in the European Union or exit the EU.
According to the latest EU referendum poll of polls analysis in the Financial Times, 44% in the UK want to remain, 44% want to exit. It’s split right down the middle.
A Brexit vote means that the UK would seek to leave the EU by 2019. According to a Financial Times report, the UK “would be prepared to defy Brussels over immigration laws, according to a leading pro-Brexit minister.” UK treasury chief George Osborne warned of a £30bn deficit coming to public finance if Britain votes to exit the EU tomorrow. The Financial Times projects that David Cameron “would probably face the end of his career as prime minister.”
(Interactive graphic “Top Brexit Concerns” courtesy of Politico)
The UK would have two years to negotiate a deal after triggering the exit clause of the EU treaties. “Some three-quarters of EU citizens working in the UK would not meet current visa requirements for non-EU overseas workers if Britain left the bloc, but such restrictions are likely to apply to new entrants rather than to EU migrants already in the UK,” the FT reported.
“On June 24, we would be having a very lively debate about what do we want to use our new autonomy and sovereignty for, and which areas,” a UK official told the Daily Mail. “I suppose very crudely I think about it as a trade-off between sovereignty, autonomy, ability to regulate, legislate in your own areas in your own fashion, Westminster free to do what it wants – and market access.”
Leaving the EU would require a new exit treaty, which would require ratification by all 27 member states, a process that could include referendums in some countries, according to the Daily Mail. “A Ministry of Trade would be set up in Whitehall to strike trade deals with countries around the world.
“‘Every area from agriculture to fisheries to financial services to energy to justice and home affairs – you would go through every area covered by the 35 areas covered by accession and have some process of de-accession, disentanglement,’ a senior UK official said.”
Senior officials see the untangling of 40 years of EU membership as something akin to a legal “revolution” that would dominate the Queen’s speech for the next five to 10 years, FT summarized. “That may involve simultaneous trade talks with scores of non-EU countries to re-confirm or revise preferential access that expire after Brexit, as well as around 100 or more mutual recognition agreements in an area like financial services.”
How Brexit Could Affect Global Currency Markets, Commodities
As the international community’s anticipation of the Brexit decision builds toward tomorrow’s climax, the effects of the decision on global markets is becoming clearer.
Last week, chances that the UK would exit the EU appeared to be growing according to polls. In response the assumption, global stock market indices had slowed and lost some steam.
At the beginning of this week, polls showed the support for a Brexit waning and the possibility that the UK would remain as a part of the European Union taking the lead. Global stock indexes jumped on Monday and the British pound posted its strongest gain since 2008. The surge in the pound, which rose more than 2% against the dollar, coincided with a broad retreat in the greenback as several polls showed the “Leave” campaign weakening. Markets likely will remain volatile and speculation-driven in anticipation of tomorrow’s vote.
Oil Prices
What does the decision mean to global oil markets? The impact felt will not be a direct hit, but the ripple effect could determine oil price direction.
The surge in value of the pound sterling coincided with the retreat of the U.S. dollar, or more directly, caused the retreat of the U.S. dollar. In contrast, the possibility of a Brexit occurring caused the value of the British pound to fall. While the value of the British pound is not directly tied to oil price, foreign exchange markets tie the U.S. dollar and British pound together. Oil contracts denominated in U.S. dollars will undoubtedly be influenced by the decision of a Brexit occurring or not.
Should a Brexit occur, the British pound will likely fall and the U.S. dollar will likely rise, forcing the price of oil to retreat. The opposite should hold true if a Brexit does not occur. On Monday, as the possibility of the Brexit occurring weakened, and the British pound surged, the U.S. dollar pulled back and the price of oil moved upward, closing $1.39 higher than Friday’s closing.
While there are several things that are tied together and the series of events may seem like a Newton’s cradle, the effect on oil price will likely be tied to the result of the vote through the foreign exchange market. Oil bulls are hoping and praying that the Brits stay put.
European Union Members
Officially created by the Maastricht Treaty in 1993, the European Union is a political and economic union with 27 member nations. Its predecessor organizations and treaties followed the end of World War II.
According to EuropeanHistory.com, member countries joined organizations that eventually became the EU according to the following timeline:
1957: Belgium, France, West Germany, Italy, Luxembourg, Netherlands
1973: Denmark, Ireland, United Kingdom
1981: Greece
1986: Portugal, Spain
1995: Austria, Finland and Sweden
2004: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic, Slovenia.
2007: Bulgaria, Romania
