- Bias. Despite my Canadian accent and outlandish family name, I lived in the U.K. and was somewhat assimilated. My bias is to be pro-Brexit. Furthermore, I have a commercial interest in financial and economic crises (more page views!).
- "Leave" unlikely to win. I have seen a lot of referenda close up, courtesy of living in La Belle Province. My experience is that there is always a big shift towards the status quo relative to poll results when you look at the final results. This is either the result of cold hard reflection when ballots are being cast, or the tendency of older voters with more "conservative" tendencies having a higher voter turnout. (UPDATE: The exit polls blew my theory about older voters out of the water; it was the older voter bloc in England that shifted the poll towards "Leave." I misjudged what these voters considered the "status quo.")
- "Remain" analysis obvious. If anything moves in response to opinion polls, expect it to revert. (For Quebec referenda, the winning trade has always been to buy Quebec bonds.)
- Even if "Leave" wins, nothing may happen. Referenda are betrayal of Britain's parliamentary tradition. (See what I wrote about assimilation?) They are not legally binding. Anyone who is pro-EU by definition does not care about the interests of individual nation-states, and so is going to have no qualms ignoring the result of a referendum. (See what I wrote about bias?)
- What happens - who knows? Even if the U.K. tries to negotiate an exit, what will happen will depend upon the result of negotiations. Right now, tone deaf continental politicians are threatening the U.K., but the disastrous state of the euro area economy means that they have a weak negotiating position. An intelligent U.K. government could presumably cut a deal that limits the short-term disruption.
UPDATE: With Cameron stepping down, the U.K. government will have a stronger bargaining position. The euro is currently being held together by spit and baling wire, and so the EU leadership should try to avoid too deep a confrontation, as the blowback onto their own economies could be disastrous. Whether they are intelligent enough to see that, or whether they will try to treat the U.K. like Greece, remains to be seen. Based upon centuries of European history, I am not entirely confident that the EU governing elites will follow a sensible course of action.
- Short-term: so what? The IMF is apparently predicting a recession if Britain leaves the EU (Guardian article). The United States had a severe recession in 1948-1949, courtesy of post-war demobilisation. (This recession is infamous, as crackpot economists have used it as evidence that high high government debt levels cause deep recessions.) The correct attitude is: so what? Was the United States supposed to stay on a total war footing forever, so as to avoid a recession? Anything that disrupts the existing patterns of commerce is likely to cause a recession, but we cannot follow the same ruts forever. Nations have a welfare state to cushion the blow the recessions.
- Long-term: depends upon your politics. Pro-EU partisans will be happy to explain how being part of the EU has helped make the United Kingdom internationally competitive. Anti-EU analysts would question the wisdom of tying Britain to an increasingly autocratic, rigid EU that is strangling itself with austerity policies. The decision is a political decision, which is exactly what the referendum voters are being consulted upon.
(c) Brian Romanchuk 2016