The current week has been a hive of activity for the ‘Brexit’ debate, with the approaching start of the Purdah period resulting in a flurry of activity from civil service bodies in favour of a ‘Remain’ vote. The ‘Leave’ side has been equally active, with it increasingly likely that most of the remaining time up until the vote itself will be taken up by more noticeable ‘Out’ arguments now that the UK government is prohibited from intervening.
Although the week has been a fairly bumpy one for Sterling’s appeal, the Pound has nonetheless advanced strongly overall against the Euro, with a starting exchange rate in the region of 1.2943 soon being eclipsed by a later average high in the area of 1.3123
Monday’s News: ‘Remain’ Camp Warns of ‘DIY Recession’ and Treasury Provides Year-Long Recession Forecast after ‘Brexit’
Given that their time for releasing data was limited, the nation’s civil services, such as the Treasury, have gone into overdrive in putting out predictions for the results of the Referendum this week.
This began on Monday, when Chancellor George Osborne published Treasury analysis that estimated that the UK would suffer from a recession lasting at least a year if it left the EU, with an accompanying figure suggesting over 500,000 jobs could be lost in the two years after a ‘Brexit’.
This forecast was foreshadowed by Business Secretary Sajid Javid before it was announced, although Javid himself was attacked by ‘Leave’ campaigner Iain Duncan Smith, who claimed that Javid was secretly an ‘Out’ supporter.
The Treasury’s daily update was released at a B&Q branch during the day, where Prime Minister David Cameron spoke alongside Osborne and appropriately argued that the fallout of a ‘Brexit’ would be a ‘DIY recession’, labelling such an outcome as a ‘self-destruct’ vote.
One notable objector to the day’s ‘scaremongering’ was actually another ‘In’ campaigner; Scottish First Minister Nicola Sturgeon. Speaking after the Treasury data was released, Sturgeon warned that making a ‘fear-based’ case for remaining in the EU risked alienating voters, and that the Government should adopt a more optimistic tack instead.
Elsewhere in the week’s opening EU Referendum news, the PM warned on Sunday that weekly shopping prices would increase in the event of a ‘Brexit’, while NHS Chief Executive Simon Stevens stated that the health service would be hit financially if the UK left the EU.
Concerns lingered among ‘Leave’ supporters that ‘12 million’ Turks would ‘invade’ the UK if Turkey joined the EU while the UK was still a member, while a report from Capital Economics pointed towards ultimately slower economic growth in Eastern Europe if ‘Brexit’ occurred.
EU Referendum Polling Data Sent the Pound Soaring on Tuesday, while Arguments Focused on Holiday Costs
The cost of a holiday abroad in and out of the EU was the subject of debate that made headlines on Tuesday, with the PM this time addressing Easyjet staff.
Cameron claimed that, on average, a £230 increase would be seen by holidaymakers after a ‘Brexit’; a forecast which factored in the presumed weakening of the Pound after such an outcome.
One of the most notable developments to affect the Pound actually came from increasingly impactful polling data, as an ORB poll put the ‘Remain’ campaign at 55% and ‘Leave’ at 42%, with other polls released around the same time also granting a sizable lead to the ‘In’ voters.
An analysis of the demographics was even more supportive of the ‘Remain’ camp, as it showed that two groups that were formerly thought to be likely ‘Brexit’ voters, namely older people and men, were both switching over the ‘Remain’ votes in the polls. In response to this piece of news, the Pound sprang up against the Euro, from a starting 1.2918 to 1.3136.
The other big Referendum news concerned Bank of England (BoE) Governor Mark Carney, who became engaged in a verbal debate with firm ‘Brexiteer’ Jacob Rees-Mogg; Carney had previously stated that ‘Brexit’ was a risky option, which Rees-Mogg took as a sign that the Governor has forfeited his neutrality and sided with the ‘In’ campaign.
By all accounts, Carney defended himself well, with Rees-Mogg’s repeated attempts to insinuate bias or complicity on the part of Carney criticised as vindictive behaviour.
Other developments involved the Government refusing to disclose how many documents it had prevented ‘Brexit’ ministers from accessing, while it became apparent that general opinion among corporate debt investors was that the UK was unlikely to leave the EU.
Further Polling Stats and IFS EU Referendum Involvement Boosted Pound Sterling on Wednesday
The Pound continued to appreciate against the Euro over Wednesday, against less-than-supportive EU Referendum developments.
Although well-intentioned, the Institute for Fiscal Studies’ (IFS) forecast that ‘Brexit’ could increase UK austerity by 2 years was met with scorn by ‘Out’ supporters, many of whom claimed that the neutral IFS had been leaned on by EU, which provides 11% of its funding, or UK Government officials.
In far less Pound-supportive developments, Wednesday’s YouGov poll put ‘Remain’ and ‘Leave’ on a level pegging, while Vote Leave shifted their argument to immigration in a bid to capture the public’s attention on a controversial issue.
A large number of miscellaneous arguments were made on Wednesday; former military officers campaigned for a ‘Brexit’, the European Central Bank’s (ECB) Ewald Nowotny dismissed any potential financial problems arising from the UK leaving the EU and a study from the Sheffield Political Economy Research Institute (SPERI) predicted that Northern Ireland’s trade could be threatened if a ‘Brexit’ took place.
Other events consisted of the World Trade Organisation (WTO) warning that import tariffs would cost the UK billions if it left the EU, over 300 historians warning against a ‘Brexit’ and a direct challenge from the ‘Remain’ group to ‘Leave’ Co-Chair Michael Gove to produce credible economic reasons for leaving the EU.
Migration, Scottish Support for ‘Remain’ and a Last-Minute Treasury Announcement on Thursday
Yesterday saw migration into the UK as the big issue, with most Referendum debates focusing on the fact that the government missed its immigration target by a long shot, with the 333,000 figure recorded being one of the highest on record.
On the ‘Remain’ side, the defence was that EU migrants to the UK give back more than they take out, while ‘Leave’ campaigners argued that leaving the EU was the only was the UK would be able to manage its borders.
A lot further north, the Scottish Parliament made a formal declaration of support for a ‘Remain’ vote, while the NHS once again chipped in with the claim that it would face a staffing crisis if the UK left the EU.
‘Leave’ supporters also focused on procurement costs with the claim that these could be greatly reduced after a ‘Brexit’, while the Chairman of BT, Michael Rake, said there was ‘absolutely no doubt’ that ‘Brexit’ would damage the UK economy.
Closing off the day’s news was a last-minute Treasury announcement before Purdah began, where the Treasury predicted that current and future pensioners would see a decrease in their state pension value if the UK left the EU.
G7 Warning against ‘Brexit’ Today sees Pound Sterling Holding Opening Levels
With the coming of the Purdah period until the vote day itself, the Treasury has been excluded from making any further reports or predictions regarding the EU Referendum, therefore it seems probable that the ‘Leave’ camp will be able to put across a more cohesive argument in the run-up to the vote.
World leaders at the G7 Summit in Japan have stated that ‘Brexit’ is a ‘serious risk to growth’, while Boris Johnson has accused the PM of being a ‘closet Brexiteer’ and has invited him to support a ‘Leave’ vote, something that Cameron has declined.
That’s it for the UK Referendum roundup this week, but we’ll be back next week with all the latest UK-EU news to keep you up to speed with the debate as it progresses.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3104 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7631 today.