Sunday, June 26

Brexit an emotional decision

It appears to me the decision was largely an emotive one with about 75% of younger voters in favour of staying. That tells me the younger generation intuitively are not nearly as hung up over issues such as migration and refugee intakes which I believe drove the exit vote amongst older voters to tip the scales in favour of an exit. But, any reduced employment and investment opportunities arising by this  move may not be as material as is envisaged unless there is retribution from EU member states (which seems most unlikely) or there is severe contagion from others such as France, Italy, Spain or Greece lining up to opt out. That potentially could cause credit markets to seize up and bring on global recessionary fears.

Although some feel the move will trigger Scotland and Northern Ireland to leave the UK I don't think this is likely as less drastic options are available. It has been reported already both Gibraltar and Scotland, which both gave resounding votes   to stay might maintain the UK's membership of the bloc. Northern Ireland could also be included in such discussions.   
Rather, I think over time, the existing status quo might be engineered with new trade deals given a modicum of goodwill. That reverts back to my original hypothesis the no vote was really all about increased sovereignty and a backlash against the more accommodative EU provisions on migration and refugees.  
Governments do have a say of course, but the reality is customers and suppliers largely make markets and determine outcomes much more so than is generally realized and market fears are about what might happen, not what are the more likely outcomes. Businesses will seek to continue to do business where it is in their best interest and as changes will take many years, new deals will be made.  
But, how long markets will remain skittish with a marked move to bonds and cash rather than equities is anyone’s guess, but, I think the position is nowhere near as dire as early market losses might otherwise suggest. What is often overlooked is the loss to huge numbers of average people who own shares through their retirement funds only to see those investments tank.
In summary, it appears, the exit votes were largely based on a desire to return to sovereign control. In the process England has effectively turned back the clock on the cooperation and open door vision which was widely applauded at the time of the EU’ s inception.


susan said...

Hi Lindsay,
It seems to me that if the youth of England had wanted the result to be 'remain' rather than 'leave' then more than 36% ought to have voted. While it's likely true that some of the leave votes came about because of the threat of opening the country to large numbers of migrants and refugees it also can't be denied the truth of the statement made by a woman in Manchester who stated after the results were in: "If you have money you vote in; if you don't have money you vote out." I think what a lot of people in the UK and Europe are looking at these days is that what used to be a Common Market that has morphed into a political and financial cabal that's answerable to nobody but themselves. You might enjoy this article by Raul Ilargi Meijer who lives in Greece and has seen firsthand what government by a management class looks like close up.

I agree with you that the longer term results won't be nearly so awful for the UK as some of the more hysterical reports have indicated. Once again, we're left to wait and see.

All the best

Lindsay Byrnes said...

Hi Susan,
It is always good to get some alterative views but from what I can gather statisticians are saying had the turnout of younger people and the general population been higher the result might possibly have been reversed. The conclusion was the lack of voter turnout was due to an assumed stay vote victory so many didn’t bother to vote. But such perspectives are hard to quantify and we are left with a country divided and inclusive of a lot of ordinary folk who voted to stay.
On the other hand the ever widening rift within British society also played a role.
Best wishes

Blogger said...

eToro is the #1 forex trading platform for beginner and established traders.