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MACROECONOMICS

Brexit Control – Dawn of a New UK?

Brexit, Control, Dawn of, New UK, Macroeconomics, fx trader, forex

1 Jul 2016

The moment I became aware of what was unfolding from the time my alarm went off at 5am on the Friday morning following the referendum I was struck with fear and anxiety of the unknown that lay ahead. By then voting had reached the point of no return and we were heading for the exit. I made my way to the West End of London to meet two friends for breakfast and we struggled to interpret what had just happened. One friend works in commercial property for a French bank. The other runs a UK business based in the Midlands and was one of the signatories of the letter many business leaders put their name to saying we should vote Remain. As we ate our Full English breakfasts we were trying to predict what this meant. My commercial property friend said that in the run up to the referendum some 75% of the bank’s UK commercial property deals were done with foreigners and he could see this only increasing with the resultant weakness of sterling, whilst the other was a little more unsure about what it meant for his business where his main market is the UK, but he also exports to the US and EU, however the fall in sterling was unlikely to make his product any more attractive to his customers abroad. So two experts in their fields were pretty certain of two outcomes from Brexit, namely higher property prices and no boon to exports, contrary to what the Leave campaign were trying to get voters to believe.

Now this was only three people having a knee-jerk discussion about the prospects for the UK economy following the Brexit vote, but I came to learn very quickly that straw polls like this really matter. Only a couple of weeks before the vote I was meeting with a handful of contacts in the City and all of them said they were voting Leave (and yes we are still on speaking terms!). Driving up and down the country on major motorways also indicated that the farmer vote was going the way of Brexit given the large amount of signs there were saying “Vote Leave”. This was an interesting observation as it was expected that the farmer vote was a shoo-in for Remain, however another farming friend said that the industry, despite receiving generous subsidies from the EU, had become disenfranchised with the whole project due to the endless rules and regulations that kept on changing every few years.

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