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Much ado about Brexit?

Brexit
I just can’t see it happening. I don’t even need numbers to back up my view. After all, both the Leave and Remain camp are having a hard enough time as it is getting us to believe their numbers. Why should I bother making life hard for myself, claiming to have calculated the Brexit impact correctly on both a GDP and/or per person basis? Because I just don’t see even a disillusioned electorate allowing this one to slip through their fingers. Yes, turnout figures are not great for general elections, but this can be pinned on an ever-receding faith in electoral mandates actually being delivered upon. The expenses scandal of the last decade doesn’t help. Remember that floating duck house? However, general elections are every 4 years. This is a once in a lifetime decision. No precedent. No backsies.

The young – not just in the UK – may be sceptical about politicians’ ulterior motives and whether they will in fact improve public transport or boost NHS funding. But this is a binary decision that will either keep the UK in the European Union or see it remove itself. And that last word is key. We (you, me, the person next to you) are being given the luxury of making one hell of a geopolitical decision for the UK and ourselves. We are not being pushed into the decision by an unhappy EU. We are not being ousted on the basis of conflict or financial disaster. We are being asked to make a democratic decision.

And I point this out as a still relatively young person, yet to reach their 40s, which means I will have to live with our collective decision for the second half of my life. And while those in their 20s might feel it pointless to vote in their local elections or for the London Mayor this week, they must bear in mind that if they don’t in June they are effectively handing their ballot papers to their parents and grandparents who may well have built up a dim view of the EU over time. They hate the red tape and being dictated to by Brussels. But they love their cheap flights and holidays. You can’t have your cake and eat it.

They may say they have not benefited, but when you dig down… It’s very easy to focus on what bugs you and allow it to overshadow a raft of positives – some of which we’re unaware of but which are nonetheless significant in aggregate. And it is widely understood that the young don’t dislike the EU half as much as the prior generation. Anecdotally, I was given the opportunity to live, work and study in France learn the language and meet my future wife , all before I could legally drink in the USA. For that I am very thankful. My colleague has links with Spain. We both benefit from cheap flights to small airports on the continent.

Turnout for the last UK general election delivered a surprise result. The Scottish in/out referendum on UK membership also wasn’t as clear cut as the polls would have had us believe. I wonder whether there is potential for fear arguments, that is fear about the risks of leaving (cost, lost time, complications) rather than staying (leave things as they, however irritating they are) to result in a surge by the young at the polling stations. However this will require a significant effort on the part of the government. If DCam wants to make sure his legacy does not comprise a blundered offer of an EU referendum which  ultimately sees the UK erroneously run for the exit, he’ll have to make a big effort to convert these potentially lost votes, convincing those who claim not to care that a lot is at stake. I wonder, would those who ‘don’t care’ mind if prices at Zara (Spain) and H&M (Sweden) were to rise in the UK?

While the vote may have been offered to us as an electoral promise from the last parliament, we must surely ask ourselves if now is really the right time to be doing this. It may be that ultimately Brexit is right for the UK. But sometime in the future. Maybe we would be stronger annexed from the continental union. Maybe trade would flourish. However, in the midst of a very protracted  economic recovery, post multiple global financial crises, is this really the right time to put all this in jeopardy?

City breaks may become more expensive with a weaker pound converting to far less Euros or dollars. Just because the Eurozone is struggling does it mean UK growth would take off should we pack our bags and move out? Economically, is it really the right time? I just don’t think so, and I hope the UK’s young see sense too.

Mike van Dulken, Head of Research (3 May)

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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