First the facts, Britain’s economy was generally better before it joined the European Union than after. That is a fact. Equipped with that read the LA Times article that is 100% negative on Brexit “Leave”. They do not mention that and predict one dire thing after another if it passes.
LA Times: Already the pound has fluctuated widely, money has moved into bonds, London stocks have gyrated and central banks in the U.S. and Europe are looking at contingency plans to stave off market shocks if Britain votes Thursday to leave the European Union.
An overreaction? Perhaps, but a strong consensus among policymakers, economists and investors says that the damage from Britain exiting the EU – Brexit, it’s dubbed – would be significant. A decision to leave would probably push Britain into recession, add impetus to secession movements across Europe and jolt financial markets around the world.
Britain could lose 1% to 6% of its annual economic output, a dozen major U.S. and European banking firms and international economic groups have estimated, although supporters of the Leave campaign dispute that.
Despite the risk, the average of the most recent polls shows the two sides essentially tied, with a dwindling number of undecided voters potentially holding key to the referendum. A poll released Sunday showing the Remain side pulling slightly ahead, although still well within the survey’s margin of error, sent markets soaring on Monday.
The British referendum has added to uncertainties from the coming presidential election and lingering anxieties about China’s economic slowdown, which threw markets into turmoil earlier this year.
“What I’m concerned about is the unpredictable,” said Hal Scott, a Harvard law professor and expert on international finance and securities regulations. His biggest worry about a Brexit is the possibility that it could set off a panic that leads to a global financial crisis, something akin to what happened in 2008 after the Wall Street firm Lehman Bros. filed for bankruptcy.
Sharp restrictions on immigration into Britain are almost certain to follow any vote to leave the EU. That would probably hammer the country’s inflated property market, which in turn would crimp consumer spending, said Jean Ergas, an economist who teaches international finance at the NYU School of Professional Studies.
Then there is the uncertainty of what a Brexit would mean for London, for decades the financial center of Europe. Citigroup and JPMorgan Chase & Co., for example, have warned that they may move operations and staff out of Britain should voters choose to leave the EU.
“One realistic outcome is that we lose the ability to passport our banking and trading services into Europe,” said Jamie Dimon, JPMorgan’s chief executive, in remarks this month in Bournemouth, one of six locations in Britain where the company has nearly 16,000 workers. “So if the UK leaves the EU, we may have no choice but to reorganize our business model here.”
Any economic fallout is likely to be compounded by what some see as an inevitable political crisis in the aftermath of a Brexit.