Welcome to the Investors Trading Academy event of the week. Each week our staff of analysts and educators tries to provide you a better understanding of a major market event scheduled soon and that have an effect on the global markets. We are starting a countdown to the June 23rd UK referendum. Those campaigning for continued EU membership ahead of the June 23 vote, including U.K. Prime Minister David Cameron, say remaining would serve the country’s economy and national security.
Opponents say Britain would flourish without the rules and regulations imposed by Brussels and be free to form trade agreements with faster-growing countries.
Pro-EU campaigners and pollsters say they expect many expats to be more international in their outlook and therefore more inclined to vote to remain.
Speaking in London, Christine Lagarde, the IMF’s managing director, said the impact on an exit to Britain’s economy could range from “pretty bad to very, very bad.” Her comments echoed those by Mark Carney, the governor of the Bank of England, who warned on Thursday that the consequences of Britain’s exit from the EU “could possibly include a technical recession.”
The IMF said a panic among investors would trigger shockwaves throughout the economy following a vote to leave, sending shares and property prices into downward spiral.
In a report that is clearly helpful to campaigners for Britain to remain in the EU, the it said that even over the longer term growth would be depressed.
Vote Leave reacted angrily to the findings, which it said were part of a plan by the government “to circumvent purdah rules by using the IMF, which is funded by the EU and the UK government”.
Asked if the Treasury had any input into the IMF’s conclusions, Ms Lagarde responded: “Heck no! If you are suggesting that, you don’t know the IMF.”
Priti Patel MP, who is backing the leave campaign, said the IMF was “wrong then and they are wrong now. It appears the Chancellor is cashing in favors to Ms Lagarde in order to encourage the IMF to bully the British people.”
Lord Lamont, a former chancellor, said: “This daily avalanche of institutional propaganda is becoming ludicrous and pitiful. Important institutions are being politicized and used to make blood-curdling forecasts.
Britain Stronger in Europe chairman Lord Rose said: “This is yet another economic expert that agrees Britain is stronger in Europe, adding to the comments of the Bank of England.”
Former Treasury Minister Lord Myners, who backs staying in the EU, added: “Every major independent economic institution, from the Bank of England to the IMF, has made it clear that leaving the EU would damage the UK economy. This is yet more evidence that leaving is a risk we cannot afford to take.”
In five weeks, the European Union will crack, no matter which way the Brexit referendum goes.
If Britain votes to leave the EU, the EU will lose its second most powerful member, and all the economic, political and military might that goes with it – imagine the United States shorn of California. If Britain
votes to remain, an à la carte EU will emerge, with countries choosing what treaties and powers they want, as Britain is doing now.
By Barry Norman, Investors Trading Academy – ITA
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