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8 May 2015
EU referendum on the way? - ING
FXStreet (Guatemala) - Analysts at ING Bank noted the prospect of an EU referendum and its potential implications.
Key Quotes:
"David Cameron’s Conservative Party has confounded pre-election polls and won a majority in the House of Commons. Having promised a referendum on the UK’s ongoing membership of the European Union by the end of 2017 we will have to prepare for up to two years of significant uncertainty ahead of the vote."
"The clear risk is that this could unsettle businesses and households. As we saw with last year’s Scottish Independence vote, foreign investors may take fright with UK asset prices and sterling likely to come under downward pressure. The economy may well lose some momentum and the BoE may raise interest rates more cautiously."
"UK GDP growth in 2017 could be half a point lower than we had been predicting, irrespective of the outcome of the vote. Should the UK negotiate a stronger deal with the EU and vote to stay, there could be a substantial bounce back in growth (3.5%+ in 2018) as delayed investment projects are finally implemented and confidence returns. UK asset prices will rebound."
"Should the UK vote to leave, Brexit raises clear risks for trade and investment and, by implication, growth and jobs. 2018 GDP growth could be 1.6%, EUR/GBP would likely move towards the 0.85 mark and the Bank of England may loosen monetary policy. This outcome could also fuel the campaign for Scottish Independence."
"A trade deal would need to be agreed very quickly and bi-lateral deals agreed with non-EU countries. This should be relatively straightforward, but foreign investors will remain nervous. As the situation stabilises in 2018, growth prospects should improve, helped by weaker currency and low interest rates. The UK’s longer term prospects will be driven by what it can do with its new found “freedoms”."
"The loss of the UK – a relatively fast growing economy that is on course to be larger than Germany in the next 20-30 years – would negatively impact the EU’s own economic outlook and global influence. The loss of the UK’s more laissez faire influence could also upset the political balance within Europe."
"Given the Conservative’s mandate there is the potential for the vote to come sooner than 2017, depending on how discussions with the EU go. This would be less economically damaging for the UK, but with the EU focusing on Greece right now EU officials may be less keen to sit down to immediate negotiations."
Key Quotes:
"David Cameron’s Conservative Party has confounded pre-election polls and won a majority in the House of Commons. Having promised a referendum on the UK’s ongoing membership of the European Union by the end of 2017 we will have to prepare for up to two years of significant uncertainty ahead of the vote."
"The clear risk is that this could unsettle businesses and households. As we saw with last year’s Scottish Independence vote, foreign investors may take fright with UK asset prices and sterling likely to come under downward pressure. The economy may well lose some momentum and the BoE may raise interest rates more cautiously."
"UK GDP growth in 2017 could be half a point lower than we had been predicting, irrespective of the outcome of the vote. Should the UK negotiate a stronger deal with the EU and vote to stay, there could be a substantial bounce back in growth (3.5%+ in 2018) as delayed investment projects are finally implemented and confidence returns. UK asset prices will rebound."
"Should the UK vote to leave, Brexit raises clear risks for trade and investment and, by implication, growth and jobs. 2018 GDP growth could be 1.6%, EUR/GBP would likely move towards the 0.85 mark and the Bank of England may loosen monetary policy. This outcome could also fuel the campaign for Scottish Independence."
"A trade deal would need to be agreed very quickly and bi-lateral deals agreed with non-EU countries. This should be relatively straightforward, but foreign investors will remain nervous. As the situation stabilises in 2018, growth prospects should improve, helped by weaker currency and low interest rates. The UK’s longer term prospects will be driven by what it can do with its new found “freedoms”."
"The loss of the UK – a relatively fast growing economy that is on course to be larger than Germany in the next 20-30 years – would negatively impact the EU’s own economic outlook and global influence. The loss of the UK’s more laissez faire influence could also upset the political balance within Europe."
"Given the Conservative’s mandate there is the potential for the vote to come sooner than 2017, depending on how discussions with the EU go. This would be less economically damaging for the UK, but with the EU focusing on Greece right now EU officials may be less keen to sit down to immediate negotiations."