This week has seen a number of dramatic announcements emerge around the possible outcome of the EU Referendum, although events in Belgium have served to limit the overall range of responses given to the mounting question of ‘Brexit or Bust’.
Owing to the high levels of political unrest, the Pound has been faring poorly against a majority of its rivals, including the Euro (GBP/EUR).
IDS Phantom Continued to Persist on Monday; CBI Gave Bleak Forecast
The week started with a bang, when the Confederation of British Industry (CBI) announced the results of a ‘Brexit’ report that had been conducted on its behalf by PricewaterhouseCoopers (PwC). The forecast was deeply pessimistic, to say the least. Predictions were that in the event of a UK exit from the EU, almost a million UK jobs would be lost, along with approximately £100bn, or -5% off GDP.
The news was met with derision among ‘Out’ campaigners, although the CBI pointed out that the current estimates weren’t even the most pessimistic that could be calculated.
Elsewhere, the Pound was weakened by further unrest in the House of Commons, where Iain Duncan Smith’s Friday resignation continued to unsettle investors who had been hoping for a neat resolution to the controversial Budget proposal of cutting disability benefits.
Brussels Terror Attacks Overshadowed Tuesday’s Political Sideshow
Initially, Tuesday seemed to be a regular day for the UK, with a planned talk from the Chancellor promising to resolve the toxic situation of benefit cuts in the Budget. As it stood, however, the unexpected and horrific terrorist attacks in Brussels cast a dark shadow over proceedings.
Before the attacks, Moody’s forecast that UK economic damage in the event of a ‘Brexit’ would be smaller than PwC had predicted, although unusually, this news was cited by both the ‘In’ and ‘Out’ campaigns as justification for their causes.
With the Brussels attacks dominating headlines, however, the House of Commons debate appeared to have been cut short in lieu of announcements concerning the situation in Belgium and possible UK security responses. The gist of the Chancellor’s message was that (for now), the benefit cuts had been dropped, although a furore was raised over why such proposals had been included in the Budget to begin with.
Elsewhere, former Labour Leader Ed Miliband voiced his support for the ‘In’ campaign and despite the scale of the human tragedy, a number of journalists and a UKIP spokesman attempted to exploit the horror by citing the attacks as justification for leaving the EU.
Owing to the continuing political instability in the UK, the Euro was still able to hold its gains against the flagging Pound.
Wednesday – Boris Johnson’s Euroscepticism Came Under Fire from Treasury Select Committee
In the aftermath of Tuesday’s events, Wednesday was much more subdued in terms of cases being made for and against remaining in the EU.
A neutral statement came from the Bank of England (BoE), which predicted a progressive rise in Sterling instability and investor uncertainty in the run up to the UK Referendum vote.
On the political front, London Mayor Boris Johnson faced a grilling from the Commons Treasury Select Committee, which effectively picked apart some erroneous facts and figures latched onto by the MP and additionally questioned his historic U-turn over the issue of the UK’s relationship with Europe.
Energy Bills and Security Risks on the Table Today as Week Draws to an Early Close
With the working week effectively ending today on account of the Easter Holidays taking place from Friday to Monday, the Pound has levelled out against a few of its usual peers.
Referendum news has been scarce, with most spectator attention being focused on what might happen to the UK’s energy bills if a ‘Brexit’ takes place. According to Energy Secretary Amber Rudd, if the UK leaves the EU energy bills could rise by around £1.5m a day, although this has been called ‘absurd’ by opponents.
The question of future energy costs and sources is a contentious one at present, as EDF’s planned development of Hinkley Point C power station is increasingly becoming a radioactive white elephant in the eyes of officials.
Elsewhere, former MI6 Head Sir Richard Dearlove has claimed that a ‘Brexit’ would improve the UK’s security; this has been countered by a defensive statement from Europol Director Rob Wainwright.
Finally, a survey from the British Banker’s Association has revealed that over half of the nation’s bankers foresee a separation of the UK from the EU as a damaging development.
That’s it for the UK Referendum roundup so far today, but we’ll be back next week with all the latest UK-EU news to keep you up to speed with the situation as it unfolds.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2666 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7896 today.