A nation divided? The UK is currently grappling with a question which could have significant consequences for Britain, Europe and indeed global finance in general.


This June, Britain will vote on whether to remain a part of the EU. This is being billed as a ‘once in a generation’ decision for UK citizens. But what financial ramifications could there be if Britain does indeed leave the EU?


Financial Arguments For Leaving

The UK pays tens of millions of pounds per day into the EU as a result of its membership, money which supporters of ‘Brexit’ argue would be much better spent on the UK’s own citizens.


Proponents of Brexit also point out that the EU is meant to operate as a single market economic bloc. Whilst there is a Euro zone bloc, it does not include all EU members, with the UK being only one of a number of EU states to keep their own currencies. Critics point out that the EU treats all member countries as if they were hypothetically economically identical, when they are transparently not in real life. For example, the UK and Germany have been recovering fairly strongly from the financial crisis of 2008 – many other countries in the EU have not had the same experience. The idea of a single market economy appears to have rarely been weaker, with the Greek crisis last year leading the Euro to the edge of the precipice on several different occasions. Given this shaky state of affairs, is it time to say goodbye to the concept of the EU altogether? Brexit supporters believe that it is.


For Staying

Those supporting Britain remaining a part of the EU seemingly have a stronger financial case. Firstly, many of the UK’s significant trading partners are in the EU – and Britain’s membership of the EU enables it to negotiate trading rules. Those who want to leave argue that the UK would be able to ensure that it continues to benefit from such rules, but there is no proof of this.


London is one of the planet’s key financial centres, and Britain’s membership of the EU has allowed the capital to market itself (particularly to America) as an English-speaking gateway to the EU. Were Britain to leave the EU, it is highly likely that many international companies would have to rethink their current position with regard to their UK presence. Dublin, for example, already hosts the European headquarters of a number of the world’s largest companies – if the UK left the EU, would more follow, tempted not only by favourable tax rates but by Ireland’s status as the only English-speaking company still in the EU? Whilst UK voters should certainly not feel pressurized to stay in the EU simply because some companies are considering downgrading their presence if the UK does vote to leave, it is something to take into account.


In the meantime, currency-wise, it appears as if the prospect of the UK leaving the EU has not injected much confidence into the UK’s currency. Just the mention that popular politician Boris Johnson, was joining the Leave campaign, sent Sterling tumbling against the US Dollar, with the Euro also dropping against USD.


At this point, it is unclear exactly how the UK will vote in 4 months’ time. But as more senior politicians weigh in and the various ‘Brexit’ and ‘Remain’ campaigns take their message to the British people, it would appear that both Sterling and the Euro are now sailing in some choppy waters.