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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / The European Union summit results. Fundamental analysis for 30.06.2016
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The European Union summit results. Fundamental analysis for 30.06.2016

Yesterday, the Outers were given a very specific answer: the access to the single market is impossible without the freedom of movement and travel. Earlier, the entire campaign of euro skeptics was based on the idea that very close economic ties of the UK with Germany, for instance, just won’t let politicians to tighten conditions of trading. They said, we would take control over the European migration, and the business would put the pressure on the EU’s ruling elites in order not to let them create barriers to trade. The interesting fact is how fast European leaders managed to consolidate as they held an informal meeting without the United Kingdom the day before. It has happened for the first time over the course of the EU history.

And today it became known, that the former mayor of London, Boris Johnson, who, in fact, was the face of the campaign, refused the idea of running for the Prime Minister position. Whether it is a coincidence or not, but after yesterday’s summit in Brussels, it would be much more difficult for the Remainians to continue persisting in their stand. In this context, it is interesting to mention the words of Jean-Claude Juncker, the President of the European Commission, who said yesterday that current words of the British euro skeptics, according to which they were going to submit the application about exiting the Union only after London formulated the position, directly indicate that they hadn’t had any firm plans, including an economic one, before and didn’t have them at that moment.

Consequently, if the Prime Minister position is taken by a more moderate politician, the prospects of applying for exiting may get even more clouded. Why? Because with each passing day it’s getting more obvious that the economic damage to the country will be significant in case London is “disconnected” from the EU’s internal market. For example, right now, one can conduct business in any country of the European Union if one has British approvals. If the Brexit really happens, one will have to get these documents, and right now almost no one is ready for this. In addition to that, after being “exiled” from the single market, the City will lose a considerable part of monetary flows.

Another important thing is that the most part of the Brits, who voted for leaving, are not very wealthy. The share of the service industry in the United Kingdom increased up to 85%, but the government hasn’t been able to find a solution for the problem relating to unclaimed industrial workers, who now make the core of the poorest social group, and who was the main targeted audience of euro skeptics’ populist rhetoric. However, if the British economy plummets in case the country does exit the Union, these people may hardly hope for better life, and it may result drop in the wage rates and bring the United Kingdom to a great economic crisis.  
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