The main problem faced by Brexit and Bremain supporters is this they are opposing ideas about what will happen in the future, but of course, no one has that answer.
Data from FE Analytics reveals a fairly volatile currency market ahead of the referendum, with the British pound falling six percent against the Euro, and almost two percent against the dollar, for the year to date.
The current volatility of the pound is no doubt due to uncertainty surrounding the referendum, especially as recent polls reveal a more even-stance.
Theres no doubt that The Bank of England is facing a dilemma, as one potential effect of Brexit could be lower economic growth. This means it could be faced with no other option than to stimulate growth by keeping interest rates low in order to maintain its two percent annualised inflation target.
Additionally, if the UK does vote to leave the EU, BritainS large trade deficit may cause a run on the sterling, which could leave the BoE with no other option but to increase interest rates in order to maintain stability. As a consequence, mortgage finance in the UK will also be affected, as lending rates would rise accordingly.
Many politicians and economists believe that the UK will see a fall in house prices should Brexit transpire, driven lower by depleting demand. Furthermore, there are claims that the housing shortage won’t improve because a vote to Brexit will reduce investment in building new homes, and limit entry of much-needed skilled workers into the construction industry.
Rishi Passi comments on the effect of Brexit, read the full article on Financial Times Adviser – 20 June 2016.