Should I Stay Or Should I Go? Brits Weigh EU “Brexit”
image: British Prime Minister David Cameron speaks on “The Future of Britain’s Relationship with the European Union,” November 10, 2015
Should I stay or should I go now?
Should I stay or should I go now?
If I go, there will be trouble
And if I stay it will be double
– The Clash
It’s appropriate that it was a British punk band from the late 1970s that would ask a question that echoes down to today: Whether the Brits should stay or go from the European Union, what has now come to be known as the “Brexit.” Right now it’s almost impossible to tell. The situation is so volatile polls taken within just hours of one another can yield vastly different results.
Poll results published Wednesday of last week indicated that the “stay” crowd was up nearly eighteen points. The British pound surged against the U.S. dollar on the news, after falling nearly eight percent against the dollar over the last year. But later the same day a different poll showed the “go” crowd up by three percent. The truth is no one will know how Brits are going to vote until the ballots are counted on June 23rd.
The stakes are enormous for the European Union. If measured collectively, the EU is the world’s largest economy, edging out the United States in terms of raw GDP. But Britain is one of the EU’s largest players and, if separated from the union would, on its own, be the world’s fifth-largest economy.
Why So Ticked Off?
While the serious economic impact of a Brexit would be far-reaching worldwide, for the British the opposition to remaining in the union seems to center around mostly non-economic issues. There’s a general feeling of resentment that EU courts can trump British laws and overrule their courts. (This sovereignty resentment is also one of the frequent criticisms you hear leveled at the Trans Pacific Partnership or TPP trade deal here in the U.S.)
The Syrian refugee crisis is another sticking point, with the Brits generally resentful that the EU can tell them how many refugees to take in. So the British kicked up a fuss, and were able to make their future acceptance of additional refugees voluntary. But that concession sparked resentment from other EU member nations that certain countries were getting off easier than the rest. In fact, it seems some in European Union leadership have become so weary of the constant complaining they’re ready to let the Brits go.
The Beginning of the End?
The wild polling likely reflects the fact that there are no easy answers on whether the British would be better off staying in the EU or leaving. There’s no shortage of opinions and warnings of dire consequences, including the IMF, which suggested the British leaving the EU would experience dire consequences to its economy.
Interestingly, I have a friend and retirement advisor who originally hails from Scotland. He’s lived in the U.S. for decades, but regularly visits Europe and the UK, including a trip just a couple of weeks ago. He travels in higher-up circles than I do (I’m just a man of the people…) so I asked him what people over there were saying about a possible Brexit. I’ll admit; his response was sobering.
“When I was in Europe, one of the main topics of conversation was the possible economic fallout if Britain does vote to leave the European Union, the so-called Brexit.
Everyone I talked to in finance in Europe said that such an exit would likely lead to a break-up of the entire Union and a possible collapse of both the euro and the British Pound. This would have a destructive effect on our dollar. In fact, the only currency likely to benefit from such a crisis would be the Chinese yuan.
The currency war that has been waged by China against the U.S. may be nearing a tipping point and the problems in Europe may be the spark that ignites a full blown currency collapse in the Western economies.
If this happens, having gold in your investment and retirement portfolios is likely to be absolutely vital in order to maintain your buying power.”