Slamming on the brakes
As the prospect of a ‘Grexit’ – a Greek exit – from the EU has faded, there is a new topic of conversation: what is the likelihood of a ‘Brexit’ – a British exit?
The UK’s top-performing fund manager Neil Woodford has weighed into the escalating debate over the merits of the eurozone – and whether Britain should stay or go.
According to The Telegraph
, he said the eurozone is “unviable in its current form and escalating uncertainty surrounding Britain’s potential exit from the European Union (EU) will damage the UK economy.”
The paper also says that he believes the prospect of a referendum to decide whether Britain would remain in the EU would slam the brakes on international investment into the UK.
However, being half in the EU was never a position that was going to be viable long-term.
“It’s a gut feel that investors will definitely have to impute a higher level of uncertainty with respect to the future of the economy, [and] the currency. All those things will have an effect on investment,” he said in a BBC World News interview. The Telegraph article
The City exposed
But it would be banks, insurers and other financial services companies that would be most at risk if Britain were to leave the EU, according to an Open Europe report
, says the Financial Times.
goes on to say that the report, which examined the impact of a Brexit on exporters, concludes that Britain could probably negotiate preferential trade deals on manufactured goods, pharmaceuticals, machinery and food and beverages.
The report interviewed businesses, trade associations and others. It says that “all exporting sectors would experience initial disruption and uncertainty in the event of a Brexit”. Financial Times piece
European columnist for The Globe and Mail
, Eric Reguly, does not agree. “Britain would not fade away like an old rose” if it were to leave, he argues. Switzerland and Norway are not EU members and their economic performance is “just fine”.
The EU would suffer more than Britain if London were to leave, he maintains. Without Britain, “the EU would be. . . dominated by Germany”, which would not be popular with the poorer Southern European countries.
“The EU will play tough with Britain if London tries to renegotiate its EU membership. But Britain will not roll over like Greece did,” he writes. “The EU needs Britain more than Britain needs the EU. The best solution would be for the EU (read: Germany) to cut the Brits a deal that would encourage them to say Yes to EU membership in any referendum.” The Globe and Mail article
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