Monday

18th Mar 2019

Column / Brexit Briefing

The domestic stakes of the UK referendum

  • Prime minister Cameron and anti-EU Farage's political future also depend on the referendum's outcome (Photo: David Holt)

A week ago, as the polls nudged Brexit slightly into an apparently decisive lead, the Leave campaign dared to imagine the victory line on 23 June.

The murder of Labour MP Jo Cox has cast a pall over the campaign. Campaigning was suspended for two days and, since hostilities resumed, the tone has been marginally less vicious.

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  • Leave leader Johnson's bid for prime minister office would have grass roots support. (Photo: Parsons_Boris_whitehall-1069)

In the meantime, the polling numbers have narrowed to a virtual dead heat. This campaign is simply too close to call.

What to watch on polling day

One interesting vignette from the campaign trail is that a number of hedge funds and investment banks have commissioned their own exit polls to get an on-the-day snap-shot of the referendum meaning they can make trades based on results no one else knows.

Unlike at general elections, British broadcasters are not paying for an authoritative exit poll to be broadcast shortly after polls close at 10PM.

There will be heavy trading on the financial markets on Thursday, and market movements may well give an indication of the result.

The regional pattern of voting will be well worth watching.

London is almost certainly going to vote for Remain, as is Scotland and Northern Ireland. However, barring a late swing, most of provincial England is likely to back a Leave vote.

Unless the margin of victory and defeat is wafer thin, we should know the result of the UK referendum between 3 and 5am.

Immediate consequences

In terms of political consequences, a narrow win for Remain or a Leave vote will almost certainly mean David Cameron’s resignation by Christmas.

Only a decisive Remain win will shore up the positions of Cameron and George Osborne, the chancellor of the exchequer. Both have seen their standing badly tarnished among Conservative MPs and supporters who hold them responsible for the aggressive ‘project fear’ campaign.

Conversely, there are a host of known unknowns in the event of a Leave result.

Faced with a Leave majority, the first decision Osborne will take on Friday morning would be whether to close the stock market until Monday to prevent a day of turmoil on the markets.

"I think on Friday morning you'll see the first reaction will be in the financial markets, because they've placed all these bets that they will move money out of Britain if Britain votes to leave,” Osborne commented on Tuesday (21 June).

The prospect of a Black Friday, marked by stock and currency sell-off of sterling, has been in traders’ minds for months.

“Sterling is almost ­certain to fall steeply and quickly if leave wins the referendum,” said billionaire trade George Soros on Tuesday, who added that “ this devaluation to be bigger and also more disruptive than the 15 percent ­devaluation that occurred in September 1992”.

UKIP redux?

Strange though it might sound, defeat would strengthen Nigel Farage and UKIP.

Eight months after narrowly losing their own referendum on independence, the Scottish National Party swept 57 of the 59 constituencies in the 2015 general election.

Similarly, a narrow Remain victory, leaving a fractured Conservative party, not to mention the 30-35 percent of Labour supporters likely to support leaving the EU, will not put the EU question to bed.

Victory for Remain probably means more UKIP MEPs at the 2019 European elections. Now there’s a scary thought.

The turmoil, at least in the short-term, will be minimal in the event of a vote for the status quo.

Like Brussels, British politics effectively shuts down between mid-July and the start of September, leaving just enough time for some serious blood-letting before politicians take their summer holidays.

Cameron will be expected to offer the olive branch of senior ministerial positions to Michael Gove, Boris Johnson and other senior Leave campaigners to avoid the collapse of his government.

Nonetheless, Boris Johnson’s front-man act for the Leave campaign has been a scarcely concealed bid for Cameron’s chair, and the former mayor of London could be prime minister within months.

If the remaining Cameron supporters regard Johnson as an opportunist traitor, his popularity among grass roots supporters - a majority of whom back a Brexit - remains largely undimmed.

Under the Conservative party’s rules on leadership elections, MPs are responsible for selecting the two top candidates for the leadership run-off. Reaching the final two who go to the membership vote is probably the main hurdle facing Johnson.

The silver lining is that this interminable campaign, and accompanying speculation, is nearly at an end. In the early hours of Friday morning it will be clear how the die was cast.

Just don’t expect the result to be the end - or even the beginning of the end - of the UK’s tortured relationship with the European Union.

Benjamin Fox, a former reporter for EUobserver, is a consultant with Sovereign Strategy and a freelance writer. He writes the "UK referendum briefing" column during the 23 June referendum campaign

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