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Talking Brexit – A fresh look at the situation so far

At Freshminds we’ve been fortunate enough to host a variety of interesting events with some fantastic guest speakers, and Tuesday’s thought leadership breakfast was no exception.

Along with leaders from Financial and Advisory Services firms, we were joined by John Peet, the political editor of The Economist to share his insights on Brexit ahead of the June referendum.

With just over 40 days to go, there has been much press and more uncertainty around the impact on UK businesses if we leave.  So the chance to discuss this in an open forum and pick the brains of someone who is very much in the know promised to be very insightful. 

The morning did not disappoint with many interesting elements of the topic raised - here are a few noteworthy views…  

 

The state of polls and politics

John kicked the morning off with the observation that so close to the referendum, it’s really quite surprising that the polls are still indicating a near enough a 50/50 split.

As such when it comes down to it, the prediction is that turnout to vote will have a massive impact and will ultimately sway the outcome. On a very basic level, older people tend to be the people who consistently turn out to vote and younger people less so. Also on a very general basis older people are more likely to vote Leave and younger Remain; thus ultimately the turn out could be incredibly important and the prediction being that with a 60%+ turn out we will Remain and with a less than 60% turn out we will Leave.

When looking at the Remain campaign, the steady 50/50 poll split is particularly remarkable given the political heavyweights that have come down firmly in favour to Remain. It’s yet more surprising that as many as 135 Conservative MPs have got behind the Leave campaign where the initial prediction was for far fewer. This is twinned with the fact that Labour has kept so remarkably quiet on the issue.

 

Who’s Opinion Counts Anyway?

The Conservative party is clearly divided. Whilst Cameron is advocating that we are better within the EU, members of his party, including the prominent voice of Boris Johnson, are campaigning to Leave. However, when looking at the timeline of events, Cameron’s opinion does lose credibility after his stance to fight for an EU settlement package. After coming away with not much to show, then moving to a fully-fledged stay rhetoric, it begs the question whether he was misleading people in his reform promise and an EU deal was just ‘window dressing’ for a political win in the elections. Perhaps he did not expect to win the general election and it was more of an angle to stand out in the campaign. 

On the flip side, within the conservative camp Boris Johnson’s bold voice that the UK should leave seems oddly timed and potentially against his more ingrained political views. Soon after the referendum vote, the eyes of the public will likely turn directly to questions over the new Tory leader. The two candidates tipped to succeed, Johnson and Osborne, are currently on polar opposites on the Brexit question. But perhaps Boris thinks he’ll be in with shot at a leadership position by going head-to-head rather than a merge of opinion, meaning that there might be more to his stance than meets the eye.

Another topic discussed was the inescapable truth that this uncertainty affects markets and that not wanting to be part of a Single Market is a weakness for the Leave campaign. Regardless, the immediate short term impact cannot help but be negative. If we leave the EU the short term effect will lead to a recession, Sterling will devolve and investment will struggle.

With this in mind, both the City of London and many UK businesses are in the Remain camp largely due to the immediate economic affects Brexit would have. The prediction is that over the coming weeks there will be a much louder pro Remain voice coming from the City. Although, this might be counteracted by pre-existing and unrelated public distrust of banks and financial institutions.

 

So where do we stand with  41 days to go?

The indecisive result of recent polls shows that neither campaign is putting out a conclusive argument, leaving the public unresolved on the issue. For a vast amount of people, there is still a large amount of doubt and confusion with mismatched information. There are weaknesses on both sides of the coin so it will be very interesting to see who can sound the clarion call for their campaign and what further developments we have to come over the next few weeks.