The Pound Sterling to Euro (GBP/EUR) exchange rate is forecast to experience volatility over the next few months and possibly, right the way through to 2017 as the argument for Britain to stay or leave the European Union is set to intensify.
The Pound Sterling to Euro (GBP/EUR) exchange rate touched a session high of 1.4015
After David Cameron’s Conservatives won a surprise majority at the general election the debate as to whether the UK should remain in the UK quickly came into focus. The Prime Minister promised to hold a referendum on the EU issue due to the increased pressure from the anti-EU party UKIP. After that party won close to 4 million votes and came second in hundreds of seats, the Conservatives know that they will held to account if they go back on their word and not give the people a say.
The outcome of such a referendum is difficult to predict, as both those in favour of staying in and those for leaving begin to prepare their arguments. One thing is certain however, both sides are likely to fight dirty to get there way. The general election is a prime example of how the mainstream media will play a pivotal role in the outcome. Whether they will be impartial and report the truth however is doubtful.
At the start of this week, Graeme MacDonald, the chief executive of JCB sent tremors through British businesses as he said that the UK should exit the EU if the government fails to negotiate reforms with Brussels. The public announcement marked the first British manufacturer to openly back a Brexit.
‘There has been far too much scaremongering about things like jobs. I do not think it is in anyone’s interest to stop trade. I don’t think we or Brussels will put up trade barriers,’ Macdonald said.
His comments follow those made last year by Sir James Dyson who said that he would be favour for the UK to leave.
It did not take long for the argument to heat up as the president of the Confederation of British Industry came out in favour of the UK staying in. Today, the head of Airbus added to the pro-EU argument.
‘Business has increasingly spoken out on this crucial issue and the time has come to turn up the volume. Speaking out clearly and in a language, which people can understand. In the months to come, our country will have to make its own choice. A choice between openness and isolation. Between shaping the future, or retreating into the past,’ said Sir Mike Rake.
Whilst big business will play a vocal role in the coming debate, small businesses may decide the referendums outcome. Many of those companies disapprove of the red tape and added bureaucracy that being a member of the EU imposes upon them.
Brexit a bigger worry than Grexit
Business leaders from the US and Europe are more concerned over a potential British exit from the EU then they are about Greece leaving the Eurozone. A recent survey showed that 61% of German business leaders felt that a ‘Brexit’ would damage Europe.
‘The UK has a great history of being a facilitator of trade and is a gateway into Europe and the rest of the world. For American businesses, there is nervous about doing business in Europe, and there tends to be a trust and certainty when you come to Europe through the UK,’ said Sacha Romanovitch, chief executive elect at Grant Thornton’s.
Another factor that could prove decisive may not have anything to do with business at all. British patriotism could prove to be a far more powerful force than any comment made by rich business leaders or the deeply distrusted banking sector.