Brexit, stage left

Concerns about Greece leaving the EU created market turbulence for three years (2012 - 2015).  Would Grexit bring down the Euro, the EU and the whole European project?  A year on and “Grexit” has become “Brexit” - the concern is now whether the UK leaves the EU.  All will be decided shortly with the referendum on 23 June.

Markets have only this year woken up to the potential disruption that Brexit can cause. There would be disruption for the UK itself, for the EU and for global markets generally. Polls tell us it will be close with “decided” voters generally split 50/50 between “Brexit” and “Bremain”.  A range of polls show 20% of voters are undecided – by voting they could determine the outcome.

Why the EU?
The EU’s origins are important.  After two devastating 20th Century wars the new thinking was that close economic ties and trade would bring peace to the continent.  Countries wouldn’t go to war when they are integrated with each other.  In 1950 a common market in coal and steel was set up by six European countries.  Germany and Italy had found a way to work with France and Belgium.  This developed into the common market which the UK (along with Denmark and Ireland) joined in 1973.

The goal of the EU was to create a single market for goods and services.  Free movement of people within the EU and a common currency were over-laid later.  The UK has since struggled with the EU’s drive for “ever closer union”.