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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / Second referendum. Fundamental analysis for 29.06.2016
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Second referendum. Fundamental analysis for 29.06.2016

The atmosphere of yesterday’s meeting of the European leaders wasn’t yet mourning, but the most tensed over the last several years. Behind closed doors, Presidents and Prime Ministers were negotiating for about three hours. After that, the French President, François Hollande, said that David Cameron was very emotional when talking about lies of the Outers. Later, Cameron himself said with a scarcely disguised bitterness in his voice that if Brussels had accepted concessions relating to the migration issues, the referendum results would have been fundamentally different.

However, Jean-Claude Juncker, the President of the European Commission, parried that if you tell your citizens awful things about the European Union and accuse it of extra bureaucratization for several years, you shouldn’t be surprised when your citizens believe in it. Taken as a whole, there was some kind of grudge against the Brits in the air, so even if there is any way to solve the situation with minimum losses, relations between London and the continental Europe will never be the same. Well, at least in years to come.

And today, when making his speech during sitting of the Parliament, Cameron said the same exactly thing as yesterday was said by Angela Merkel in front the Bundestag. While being booed by the Outers, the British Prime Minister said that it would be impossible to keep access to the EU’s internal market and at the same time limit the migration. Euro skeptics often distinguished these two things – the migration is one thing, and the economy is the other. But Cameron reminded the Parliament members that the single market includes free movement of the EU citizens and the obligation to pay installments.

Thus, the European Union leaders sent out a clear message that if the United Kingdom leaves the EU, it will lose access to the single market. In this context, it’s quite interesting to follow predictions about the British economy growth, which are constantly updated. If earlier they expected the economy to grow by 2.1% next year, present estimations indicate a possible slowdown up to 0.4%, in case the country start the procedure of leaving the Union. Moreover, in the next several months, we’re likely to see the investment bust – everyone will simply wait for a new development in the situation and any clarification of the future economic relations between the Britain and the EU, given the Brexit happens after all.

After a short pause, the Remainians, with increasing frequency, start talking about the second referendum. With regard to the above mentioned, they do accept the fact that the decision to leave the Union has already been taken, but, at the same time, note that it’s necessary to win a mandate from the British citizens for conditions of the exit. If the first referendum decided only to be or not to be the member of the European Union, the second one may include several particular issues, such as “Are you supportive of regaining the migration control and, at the same time, exiting the EU’s internal market?” It’s highly likely that after the Pound’s enormous decline, the Brits, in case the second referendum does take place, won’t be so interested in voting for populists’ slogans.
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