This week has seen a fairly large spread of UK Referendum debates, although for the most part the ground-breaking leak of over 11 million documents supposedly pertaining to global tax avoidance, the so-called ‘Panama Papers’, has overshadowed or had an impact on most of the proceedings.
As with the previous week, Sterling started at an advantage against the Euro (GBP/EUR) but has closed the week on another low note.
Week’s Opening Rocked by Unprecedented Leak of Global Offshore Accounting Documents
Monday was relatively low-key in terms of Referendum arguments, with the biggest shift in the Pound’s value surprisingly coming from Panama.
This was the leak of a vast number of documents from Panamanian law firm Mossack Fonseca, revealing that the company assisted some of its clients, including global companies and figureheads, with potentially questionable tax practices in well-known tax havens.
Given the sheer size of the data dump, the media has gradually revealed the details over the course of the past week, although the first was one of the most damaging for the UK, when it emerged that, by association, the Prime Minister was a potential beneficiary of tax avoidance schemes via his late father’s economic activities.
While ‘early days’ the news nonetheless damaged the Pound’s appeal, due to the fear that a less credible PM could lead to more voters saying ‘Out’ than ‘In’ in the Referendum Vote.
Elsewhere, the ‘Out’ campaign was supported by London Mayor Boris Johnson, who stated that leaving the EU would be like escaping from prison.
For the ‘In’ campaign, influence came from Airbus and Aviva Investors stating that reduced investment and a UK recession respectively would come from a ‘Brexit’, while Standard and Poor’s warned that the UK was unlikely to retain its AAA credit rating if it left the EU.
Snowballing ‘Panama Papers’ Situation Undermined EU Referendum and Softened Sterling’s Appeal on Tuesday
The Pound lost out notably against the Euro and its other competitors on Tuesday, although ‘Brexit’ news was actually in fairly short supply.
On the face of it, the only major contribution to the debate was from Phones 4U founder John Caudwell, who denounced the EU as a financial detractor on the UK, referring to UK payments to the EU as ‘gone from the British taxpayer. Gone for good’.
Caudwell also scoffed at claims that a ‘Brexit’ would cost 3 million UK jobs, and called ‘In’ campaign efforts ‘a lot of hysteria’.
In other news, fresh information from the leaked Panamanian documents showed that a large number of overseas accounts have been established on the British Virgin Islands, a known tax haven. In response to this fact, Leader of the Opposition Jeremy Corbyn urged the PM to force the BVI to shut off its tax haven status, which sparked fresh debates about the validity and applicability of national and international sovereignty.
Close ‘Brexit’ Polling Results and Uncertain Steel Futures Made Wednesday’s Headlines
The main UK Referendum story of Wednesday was that a pair of recent polls over public sentiment for the June 23rd vote, coming from ICM and YouGov, both put very little distance between the two opposing campaigns. A notable factor in both surveys was that the percentage of undecided voters was relatively high, perhaps indicating increasing public weariness with the weekly bombardments of conflicting and caustic arguments.
In other UK news, the Pound was softened by a clarification on last week’s steel news. Although it had seemed that Indian businessman Sanjeev Gupta was a strong contender for taking over the flagging Port Talbot steelworks, Gupta confessed that his plans for the plant were extremely theoretical, having been composed ‘on the back of an envelope’.
At its lowest point in the middle of the week, the Pound fell to 1.2345 against the Euro.
Yesterday’s UK Referendum News Brought Major Blow to ‘In’ Campaign’s Chances
With the PM continuing to struggle with the public backlash from familial association with tax havens on Thursday, another piece of information emerged to send confidence in Cameron’s leadership to a new low.
This was the news that the pro-EU Government was apparently set to spend £9m of taxpayers’ money in order to produce and send pro-EU leaflets to every home in the UK. In addition to the cost raising eyebrows, the fact that the ‘Leave’ campaign was only allocated £7m for its own promotion also placed the Government under fire for ‘outmuscling’ its competition.
Further afield, the ‘Out’ campaign got another windfall when Dutch voters rejected plans to remove trade barriers between the EU and Ukraine. While not legally binding and suffering from extremely low voter turnout, the news was nonetheless exploited by ‘Leave’ groups as proof of the apparent instability and unpopularity of the European Union.
Cameron’s Response to Tax Speculation Today may have Left Lasting Damage to PM’s Reputation
While the last major UK Referendum story of the week broke yesterday, it has continued to have an impact today.
Having finally confirmed that he did previously benefit from his late father’s offshore trust, Cameron has been desperately hoping for closure to the speculation into his tax activities, but the damage to his credibility, and by extension the Government-backed ‘In’ campaign, may have already been done.
That’s it for the UK Referendum roundup so far today, but we’ll be back next week with all the latest UK-EU news to keep you up to speed with the situation as it unfolds.