Referendum money: what the experts think
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Brexit bets
Hedge funds and banks are commissioning their own private exit polls to determine voting patterns in the EU referendum, with a view to laying “big bets” on the result, said Chris Giles and Jim Pickard in the Financial Times. Their hope is that they’ll be the “first to benefit financially from a Government-induced swing in sterling since George Soros bet against the pound” in 1992, when sterling crashed out of the European Exchange Rate Mechanism. The cost of a “rudimentary” exit poll is about £500,000, a trifling sum compared to the “potential profits available from finding out whether Leave or Remain is likely to win”. A “modest” rise in the pound is expected if Remain wins, and a sharp drop if Brexit does. Financial markets have recently “all but discounted” a Leave vote, according to Adam Cole of RBC Capital Markets. “The UK’S implied EU exit risk premium has collapsed” – raising the prospect of wild swings in sterling if Leave seems to be doing well on 23 June.
What the bookies say
According to William Hill, “the odds are now 6-1 on for our voting to remain in the EU”, said William Keegan in The Observer. But the polls continue to suggest that the vote will be a good deal closer. Certainly, “nothing can be taken for granted”. It’s noteworthy that although Remain is “apparently a racing certainty” according to the bookies, “far more individual bets are being placed on a Brexit outcome”. Thus, although almost fourfifths of the money has been put on Remain, twothirds of the individual, and obviously much smaller, bets have been for Brexit.
Threat or opportunity?
The Treasury has issued “apocalyptic warnings” about the impact of leaving the EU on pensions, house prices and even supermarket bills, said Ruth Emery in The Sunday Times. But Brexit “may not be such a doomsday scenario” for savers: much depends on your personal circumstances. If a falling pound pushes up interest rates and bond yields, it could prove a boon for battered annuity rates – good news for pensioners. On the other hand, if Brexit triggers a nasty bout of stock market volatility, it could “devastate savers’ pots”.