DIY Investor Magazine
/
March 2016
14
This article’s title is a direct quote made by a colleague
when I mentioned that I had been asked to contribute
this piece for DIY Investor. He is quite right, this has
been on-going for years. Therefore, my overriding hope
is that the referendum on the 23rd June will see an end
to this ‘never ending story’. Sadly, I fear this will not be
the case.
Philip Gilbert,
Head of Fixed Income, Beaufort Securities
From the outset I will state that I intend to show no
political bias, nor do I intend to make compelling
arguments for staying or leaving.
There are certain indisputable facts, for example our
contributions to the EU:
BREXIT:
‘THE NEVER ENDING STORY’
ANOTHER EFFECT OF THE DISAPPOINTED MAJORITY
WILL BE THE IMPACT IT HAS ON THE POLITICAL
PARTIES.
The above was taken from fullfact.org, in an article
entitled, ‘The UK’s EU Membership fee’, published
on 25th February 2016. The tenet of the article is that
whilst we can be sure how much we contribute, what
we get back is harder to define. The table clearly
shows actual EU spending on the UK, however their
conclusion is that it’s far harder to be sure about how
much, if anything, comes back in economic benefits.
‘There is no definitive study of the economic impact of
the UK’s EU membership or the costs and benefits of
withdrawal’, as the House of Commons Library says.
Many economists, fund managers, and captains of
industry have put forth their opinion; for everyone
that says we are better off staying, another makes an
equally compelling argument for leaving. Most, if not
all, are far better qualified to comment than I; therefore I
will not attempt to.
Instead I will pose two questions that were asked at a
recent Brexit debate I attended.
The first was, ‘how easy will it actually to be to leave the
EU’? Here we have consensus, it is widely accepted
that it will take at least two years, which represents two
years of uncertainty, and all investors know how much
markets like uncertainty! Furthermore, there will be a
good number of benefits we wish to keep. These will
have to be renegotiated with the UK likely being in a
position of weakness after leaving the club!
The second was, ‘will this be the end of the never
ending story’? I think not. Whatever the outcome, and
it looks like neither side will have an overwhelming
majority, there will be people who are disappointed.
