Britain’s supporters and opponents are making their final move
Germany warns from EU fall if Britain departure
Britain is expected to incur $145b as a result of its expected departure of EU
The UK’S EU referendum will be held tomorrow. Many are worried about Britain’s departure of EU as it will result in negative consequences on the market direction. Officials expect overlaps of UK’s economy in case of voting turned against UK’s exit of EU, according to Le Monde French newspaper.
Analysts of Goldman Sachs expect sterling pound price fall at 11 per cent of its current value. This is going to influence Europe’s economy negatively as they expect euro’s price fall at 4 per cent. In addition to Japanese yen’s price fall at 14 per cent, Swiss franc at 8 per cent and Norwegian krone at 3 per cent.
Lagarde: A big threat
Christine Lagarde, Managing Director of the International Monetary Fund, warns from UK’s exist from EU. UK’s departure will result in “a big threat” over the world’s economy, she says. International Monetary Fund has released a report on the occasion of Largade’s visit to London. The report states that Britain’s GPD might incur loss ranging from 1.5 per cent to 9.5 per cent in case it leaves the EU. Lagarde defused any accusations on interfering with Britain’s affairs, explaining that Britain’s exit from EU is an international concern. She commented, “We will not enjoy any positive outcome of this leave”. On the other hand, International Monetary Fund believes that if British citizens vote for UK’s stay in EU, Britain’s economic growth rate might increase from 2 per cent to 2.2 or 3.2 per cent.
EU’s possible fall
Jean-Claude Juncker, the president of the European Commission, has declared that EU will not face the consequences of Britain’s departure if its opponents win before a week of EU referendum.
Juncker said, in a speech to the World Economic Forum in Saint Petersburg, “I do not think that Britain’s departure from EU will threaten its fall because if Britain leaves, we will have the same cooperation policy in Europe.”
Cash Liquidity
Majority of banks and financial institutions are worried about the variations of the market. The Central Bank decided to provide cash liquidity to the biggest financial institutions to restore market balance. The Central Bank has made 3 appointments to provide cash liquidity; the first appointment is on Tuesday 13th June and the second is on 21st June. As for the last, it will be on 28th June after the referendum takes place.
Expected negative consequences of UK’s departure will come into effect gradually. Knowledgeable sources assert that customers’ capability of getting loans from British banks is estimated at 400 times of their bank account total deposit. The capacity of loans decreased to 20 times and it is expected to decrease 10 times of cash deposit.
According to Le Monde newspaper, there will be some challenges facing companies when getting financial liquidity and capital cost increase.
HSBC bank warns from the layoff of 1000 employees in case of voting to disassociation. Jamie Dimon, chairman of JPMorgan Chase Bank, expects the layoff of around 3000 to 4000 employees in London.
Whatever the expected preparations and prevention procedures are, analysts believe that the total loss and consequences of UK’s departure are not possible to expect. The main consequence may be losing financial “visa” towards the rest of EU countries.
Some analysts fear the possibility of Europe economic recession after UK’s departure of EU which will add to the pressure of world economy. The German Minister of Foreign Affairs, Frank Walter Steinmeier, warns British citizens from voting to leave EU stating that this could lead to EU’s fall. Steinmeier warns from the risks of “National bias which could lead to turning European countries against each other”. He adds, Germany is a major UK’s business partner.
