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UK Treasury report highlights long-term economic cost of Brexit - MUFG

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Apr 19, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Lee Hardman, Currency Analyst at MUFG, notes that the UK Treasury released their much anticipated report yesterday which analyses the long-term economic impact of EU membership and the alternatives.

    Key Quotes

    “The report supports the campaign to remain within the EU by concluding that none of the alternatives support trade and provide influence on the world stage in the same way as continued membership of a reformed EU, and all of them come with the serious economic costs that affect businesses, jobs, living standards and the public finances for decades to come. Under the Treasury’s central assumption that the UK would seek a negotiated bilateral agreement, like Canada, the report estimates that GDP would be 6.2% lower, families would be GBP4,300 worse off and tax receipts would face an annual GBP36 billion black hole.

    The Treasury’s conclusion that the UK will be worse off economically outside of the EU is broadly in line with other external institutions assessments. Opinion polls have revealed that the public even those who are Eurosceptic tend to share the view that the UK will be worse off economically outside the EU. It is one of the key reasons why we expect the UK to vote to remain within the EU. Nevertheless, the referendum is unlikely to be decided by the economic arguments alone given heightened public concern over other key issues like immigration which will boost support for the Leave campaign and contributes to uncertainty over the result.

    The latest ORB opinion poll published in today’s Telegraph newspaper will have provided some reassurance to the Remain campaign. The poll revealed that support to remain increased to 52% compared to 43% who want to leave the EU. The poll revealed as well that Leave voters are still more motivated to vote at this stage (70%), although there was also encouraging evidence that those who want the UK to remain in the EU are becoming more motivated to vote (65%).”
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