Businesses and investors are in fear that an inevitable Brexit future is on the doorway – bringing a certain darkness in the economy with a deep recession due to the fact that now investors have now wiped off big numbers yesterday.
The FTSE 100 crashed below the 6000 mark for the first time since February and was down nearly 80 points at 5968 shortly before 11am. Markets also fell further in France, Germany and Asia after three new polls put the Leave campaign ahead.
The sharp drop in London means that the FTSE 100 has lost more than £80 billion in four days. The pound also fell sharply and — in an extraordinary development — investors were so desperate for a safe haven for their money that 10-year bonds in Germany turned negative for the first time ever. The negative yield means that people are in effect paying to lend money to the German government for a full decade.
The pound fell one per cent by mid-morning against the dollar, and was down against currencies across the globe including the Guatemalan quetzal, Salvadoran colon and Colombian peso. “Sterling is being tossed overboard as our EU membership nears an iceberg,” said Howard Archer, chief UK and European economist at IHS Global Insight.
“The klaxons are sounding for sterling across the City. The pound is sinking fast and the FTSE is being thrown about in turbulent seas.” With nine days to go to the June 23 referendum day, uncertainty gripped the markets after a YouGov poll for The Times showed Leave seven points ahead of Remain.
Phone and online ICM polls for the Guardian put Leave six points in front, while an ORB survey in the Daily Telegraph gave the Brexiters a one point lead. The Sun newspaper also came out in support of Brexit this morning.
Bookmaker William Hill said if the trend towards continued towards Leave, a Brexit will become the favourite in the EU referendum outcome by the weekend. The shift towards Leave among voters came despite warnings from the Bank of England governor Mark Carney, the Treasury, the Institute for Fiscal Studies and the International Monetary Fund of an economic blow to Britain, at least in the short term, if Britain quits the EU.
The IMF repeated its warning today over Brexit. Speaking at a conference in Beijing, IMF first deputy managing director David Lipton said: “It’s very hard to anticipate what those effects may be but that uncertainty would be a negative factor and come at a time when the global recovery remains slow and somewhat weak. That kind of uncertainty would be unhelpful.”
Amid the rising economic concerns, Leave campaigners insisted that more than £8 billion saved from contributions to Brussels would mean that funding to farmers, universities, cultural organisations and regional aid, currently coming from the EU, would continue until at least 2020 if Britain voted to quit the EU. They argued that there would also be money left to invest in other priorities such as the NHS.
But the Remain camp, and leading economists, have warned that the economic blow to Britain would be so severe that it would wipe out any money saved from the EU contributions.
