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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / “Was there the Brexit?” Fundamental analysis for 28.06.2016
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“Was there the Brexit?” Fundamental analysis for 28.06.2016

The word “Brexit”, which is now widely used, causes a certain confusion, because, in fact, the process of the UK’s exiting the European Union hasn’t even started yet. During his electoral campaign, David Cameron, the British Prime Minister, repeatedly emphasized that if euro skeptics won the referendum, the notification about the “divorce” procedure would be sent to Brussels the following day. However, right after the referendum results were published, Cameron announced that he was going to resign and all issues related to the country’s exiting the EU would be resolved by his successor.

In European capital cities, they may demand to start the negotiations procedure according to the Article 50 of the Treaty of Lisbon immediately as much as they like, but everything is heading in such a way that London is going to impede negotiations as long as it can or even won’t start them at all. Why? Credit agencies have already reduced the British rating, the Pound continues falling, larges banks have announced a possible relocation of their offices to Ireland or the continent Europe. After the referendum, politicians were so sure in their words that they accepted the people’s choice, so everything went the way as if the Brexit had already happened.

As a matter of fact, it looks like some kind of “test drive” of the country’s exiting the EU. Moreover, even the Outers almost admitted their populism, when after the voting, they refused to keep their promise to steer money, which was earlier spent to pay installments, into health care system. It’s highly likely that if Boris Johnson, the former mayor of London and David Cameron’s school friend, makes his way to the Prime Minister position, later his rhetoric will be completely different. Possibly, there might be a format of some “associated” membership of the United Kingdom in the European Union.

If we take a more detailed look at surveys and polls, considerable number of the Brits voted for exiting due to the migration issues. Johnson’s rhetoric about taking back control over the country’s borders may be rather convincing. As a matter of fact, the United Kingdom is already controlling its borders, but European citizens are allowed to enter freely and, by notification procedure, qualify for getting a job. If the European Commission makes a compromise after all, for instance, in the form of some annual quota for such working permits, then the Britain might remain in the European Union and keep the access to the EU’s internal market.

In addition to that, perspectives of the second referendum appear on the horizon. The important thing is that the first voting was relating only to the country’s membership in the European Union. So, if London and Brussels are able to resolve the migration issues, there might be the second referendum, this time about future relations with Europe. Such cases have already taken place. The Danes and the Irish voted against the European agreements during their referendums. After some concessions on the part of the EU, second referendums ended in the opposite way.
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