Daily Management Review

Brexit's Probability is 35-40%


Experts of IHS Global Insight estimate the probability of Brexit at the June referendum vote at 35-40%. The consequences of a possible exit from the EU for Britain, according to IHS analysts, depend on result of the negotiations between the UK and the EU, including on the trade agreement and the country's access to the single European market.

According to a report published by research firm IHS Global Insight, the probability of Brexit is ranging from 35% to 40%. According to ‘In Or Out Of The EU: The Economic Considerations Report’, most experts agree that the way out of the EU will hit the UK economy in the short term; meanwhile, projections for the long-term are different.

As IHS Chief Economist for Europe and the UK and one of the authors of the report, Howard Archer, puts it: "If Britain decides to withdraw from the EU, the impact will depend on the release conditions. It will be a two-year period between the decision to withdraw and the moment when the output becomes really true. An important issue for the UK economy during this period is that how friendly, constructive and successful negotiations between the UK and the EU will be."

According to IHS analysts, Brexit’s consequences for the country would be very different depending on whether the output will go off "soft" or "hard" course. "Soft" scenario envisages the UK successfully negotiated with the EU and the conclusion of a comprehensive trade agreement, as well as the country’s full access to the European single market. In addition, the continued influx of highly skilled workers in the UK in reducing the inflow of those low-skilled. In the case of "hard" scenario, Brexit will be long and difficult, without full access to the single European market. According to the report, such a scenario will be accompanied by a significant reduction in foreign direct investment and the deteriorating position of London as a financial center. The British immigration policy will lead in the longer term to a shortage of workers in the country.

In any case, Brexit will beyond doubt lead to a fairly long period of uncertainty. In the short term, it will have quite a strong impact on the British economy in 2016, and the negative impact on the country's GDP in 2017 and, most likely in 2018. 

As reported in early April by the British newspaper The Guardian referring to the online survey research services Opinium, 43% of the British are for leaving the EU, 39% - against, while the rest haven’t decided yet.

source: ibtimes.co.uk