Global shares have been under pressure during the past week ahead of Britain’s June 23rd Brexit Referendum vote that determines whether Britain will remain in the 28 member European Union.
Last week U.K. stock indexes had their 2nd largest outflows in 10 year due to rising concerns of a Brexit.
Investors have taken cues nearly on a daily basis from a variety of recent polls in the U.K. that offer real time snapshots about the likelihood of British citizens voting to leave the 28 member political-economic European union.
Overall, investors expect the British pound to tumble if Britain leaves the European Union.
A recent poll taken last Thursday and Friday prior to the murder of British lawmaker Jo Cox reveals a slight swing back to the “Remain in the European Union” side.
A YouGov poll published by the Sunday Times taken on Thursday and Friday showed that 44 percent want to remain compared to 43 percent that want to leave the EU.
Another poll conducted by on Friday and Saturday by research group Survation for the Mail on Sunday show that 45 percent of British citizens want to remain and 42 percent want to leave the EU.
Britain is officially not part of the EU’s 19 member currency union but still plays a large financial role in the European Union with London as a financial center for a variety of international banks, including U.S. ones such as Goldman Sachs, Morgan Stanley, and J.P. Morgan.
Some of the primary reasons behind the “Leave the EU” side include British frustration with EU regulations on U.K. businesses and EU membership fees with little in return, loss of control with their borders, and open ended policies about “free movement” across Britain for EU members.
Last year London’s population surged to over 8.6 million and is forecast to increase to between 11 million and 13 million by 2050.
The U.K. has a population over 65 million, the third largest in the EU behind Germany and France, and is expected to rise with projections showing an increase to 74 million by 2039, outpacing growth rates in other EU countries, boosted by the rise in immigrants.
Approximately 70 percent of the population increase between 2001 and 2010 censuses in Britain was due to foreign born immigration with 7.5 million born abroad.
The EU has enshrined “free movement of labor” in their political framework which means that any citizen from the other 27 countries across the EU can arrive in Great Britain looking for employment.
The U.K. population is projected to grow by 500,000 a year, approximately the size of Liverpool every year which is up from the current level of 330,000, according to the Office of National Statistics.
MigrationWatchUK which is not taking an official position on the U.K.’s membership in the EU wrote on their website, “The current scale of migration to the UK, 330,000 a year, of which roughly half is from the EU, is completely unsustainable.”
The “Leave EU” side has used the surging U.K. population numbers to shift momentum away from Britain accepting the EU’s immigration policy that ultimately seeks to embrace the recent influx of non-EU migrants by spreading them across EU member states.
Currently, the U.K. and Ireland choose on a case by case basis whether or not to adopt EU rules on asylum, immigration, and visa policies.
Last year Hungary became a flash point for migrants seeking to gain asylum in the EU.
Migrants used Hungary as gateway country on their journey to other EU countries in Northern Europe.
Hungary and neighbor Slovakia refused to cooperate with the EU quota plan for distributing migrants entering the EU.
Last year, the number of asylum seekers in the EU more than doubled to nearly 1.3 million.
Remain In EU Case
The “Remain in the EU” side claim that the EU receives benefits and perks from EU membership. They argue that membership makes it easier for businesses in the U.K. to sell to other EU countries and believe that the increase of immigrants helps to fuel economic growth in the country.
The U.K. has the 5th largest economy in the world measured by GDP growth and is the 2nd largest in the EU behind Germany.
The U.K.’s economy expanded by 2 percent during the 1st quarter of 2016 and 2.2 percent in 2015.
During a June 17th speech in Vienna titled “Unity In Diversity: The Case For Europe”, IMF Acting Director Christine Lagarde said that the economic risks of leaving the EU are “firmly to the downside.”
Lagarde pointed to the jobs and income gains that have come from increased trade within the EU.
“And with more trade has come more investment, as the U.K. has become integrated into European supply chains—such as in the aerospace industry, and in factories producing cars for the whole European market” Lagard said.
Lagarde voiced her support for free movement of labor for the U.K.
“The U.K. has benefited from the many contributions of talented and hard-working migrants from all over the world, including the EU, while providing record-high levels of employment for all its residents” Lagarde said.
Lagarde suggested that EU membership has also made Britain a more diverse, more exciting, and more creative country.
There remains significant risks if Britain votes to leave the EU on Thursday during their upcoming referendum vote.
A referendum vote to leave the European Union will likely motivate other anti EU and euro-skeptic movements in Europe with fears growing about the entire EU disintegrating. The euro currency and European equity markets would likely face heavy selling pressure.
Written By: Johnathan Schweitzer