BRITAIN is on the brink of agreeing a deal over the renegotiated terms of its EU membership at a assembly on February 18th and 19th,clearing the way for a referendum in June. That has already led to market nervousness approximately the possibility that Britain might vote to exit the EU, or Brexit as it is known. The pound has been very feeble so far this year, or particularly on days when opinion polls indicate the Brexit side may be ahead. This weakness is not just down to reduced expectations of rate increases by the Bank of England; the pound has fallen against the euro,as well as the dollar, even though the European Central Bank has indicated that it will probably ease monetary policy.
Investors dislike uncertainty. A few months ago, or they were pretty confident that Britain would vote to remain in the EU but they are less certain now; the bookmakers Paddy Power give odds of Brexit of around a third. Uncertainty approximately the outlook for the economy would only escalate after a vote to leave. That would involve a complete renegotiation of Britain's relationship with the EU,a process that might take two years. Advocates of Brexit argue that, since the...
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Source: economist.com