The Bank of England has already held one liquidity issuance and there are two more scheduled this month, they are pumping as much cash in the banking system as they can just in case there will be a vote for Brexit, they have also tapped into two swap lines, one with the Federal Reserve and one with the European Central Bank.
If you think that leaving the ERM was a disaster, one that only cost a few Billion, you just wait and see what happens when the UK votes to leave.
For anyone slightly interested in Foreign exchange rates have a look at what happened when the Swiss National Bank dropped their currency peg, the exchange rate versus the dollar went through the floor, hundreds of Billions changed hands.
The BOE is meeting for an extraordinary meeting at the referendum and plenty can see them raising rates a few percent to stem the outflow of Pounds.
Half the FTSE is owned by foreigners, how many of them will hold on to their investments and how many will cash out when the UK leaves especially once the Pound start dropping.
ALL of the regulated services industry in the UK will have to move back to the EU if we vote out, Wells Fargo have already stated 30-50,000 jobs will have to go, the CEO of Lloyds has already stated that they can’t operate in the UK anymore unless they negotiate 27 different agreements to sell their services in the EU.
ALL of the major Swiss banks are in London because they can’t operate in their own country into the EU. ALL of the American banks are in London because they can’t operate into the EU from the US. They are here because we have free passporting, we will lose that right once we vote to leave.
All of that will move and leave London, probably to Frankfurt.
Before you say, who cares, just a bunch of bankers, those bankers, insurance companies, pension funds and accountancy firms generate 76% of our GDP.
Once the services industry are forced to move their regulated entities to the EU what do you think is going to stop them from moving the whole shop, it would be that much easier to operate then.
And don’t say it will be too expensive to move the whole services sector, it will cost them nothing, they just charge their customer.
We are not a manufacturing nation, we haven’t been for decades, we are a services nation. This is not about immigration, manufacturing or even driving a lorry, this is about playing fast and loose with 3/4 of our income.
The CEO of Virgin money has already backed the Treasury and publicly stated that mortgage rates will go up with at least a percent after a Brexit vote. If the BOE does have to step in to stem capital flows, expect a mortgage rate increase of a few percent. That is 30 Billion worth of mortgage that will have to go up with £2000 pounds a year each on average, that is just one mortgage broker. That will not only increase the cost of owning a house but also of renting one as the Buy to Let mortgage will go up even more as they demand a premium.
For those interested in what happens to currencies, have a look at the last few days and see what a 2 percentage swing in favour of Brexit did to the value of the Pound.
Voting for Brexit is voting for Armageddon, it is not going to solve the immigrant issue, it will trigger a recession the likes of which no European country has seen.
The UK is over a Trillion in debt, what do you think a Brexit is going to do to the cost of servicing that debt, it will force any post Brexit government into a generation of cuts and austerity. No investor is going to want to invest in the UK post Brexit with that much uncertainty and will demand a far higher interest rate then we are paying now. We are enjoying a discount on our debt only because we are in the EU and have our own currency, that discount will be stripped out on a Brexit vote.
The leave campaign keeps talking about the money we send to the EU, they don’t mention the hundreds of Billions leaving will cost us.
The leave campaign have no facts, they just play a psych warfare game, just ignore everybody and everyone, we will be fine. Don’t ask how we will pay for it or how we are going to trade just trust us, yeah right.
We can’t use the Denmark or Swiss option, that won’t keep the services industry here and both require free movement of people and still pay into the system, what do we gain, nothing.
No Brexiter can publish any facts, it is all about psychology, interesting for a few researchers, but not really a solid foundation for a once in a lifetime vote.
