A vote by Britain to leave the European Union would be a “final decision” with unknown consequences, Prime Minister David Cameron warned Monday, as uncertainty over Britain’s future in the bloc sent the pound plunging on currency markets.
Cameron told lawmakers in the House of Commons that the June 23 referendum “is a straight democratic decision: staying in or leaving.”
He tried to quell doubts about remaining in the EU among many of his Conservative lawmakers, saying that leaving would be “a great leap into the unknown” that could harm Britain’s economy and security.
“Leaving the EU may briefly make us feel more sovereign,” he said, but argued: “We’re better off fighting from the inside.”
The pound fell 2.1 percent to $1.4106 Monday, after touching a seven-year low of $1.4058, and also sagged 0.5 percent to 1.28 euros, as bookmakers shortened the odds on a vote to leave — though betting markets still favor a “remain” victory.
UBS Wealth Management said Monday it put the probability of a British EU exit — known as “Brexit” — at 30 percent.
Simon Smith, chief economist at FxPro, said the next four months “won’t be a fun time” for the pound, which has weakened in recent months.
“It’s more the uncertainty that will weigh on the currency, rather than investors taking a view on the outcome and the implications for the economy, which are hard to argue either way,” he said.
Many big businesses have warned that leaving the EU — with its open internal market of 500 million people — would hammer the British economy. But London Mayor Boris Johnson, a high-profile supporter of an “out” vote, said fears of economic catastrophe were “wildly exaggerated.”
He likened the predictions to those who had issued apocalyptic warnings that if Britain did not join the euro single currency, the City of London financial district would suffer and “great mutant rats would gnaw the faces of the last bankers.”
However, Johnson suggested his goal is to vote to leave, then reopen negotiations on terms for remaining in the EU.
“There is only one way to get the change we need — and that is to vote to go; because all EU history shows that they only really listen to a population when it says ‘no,'” he wrote in the Daily Telegraph.
Cameron tried to banish that notion, telling lawmakers that ignoring a popular vote to leave “would not just be wrong; it would be undemocratic.”
Comparing the relationship with Europe to a marriage, he said “I don’t know any (couples) who have begun divorce proceedings in order to renew their marriage vows.”
http://www.nytimes.com/aponline/2016/02/22/world/europe/ap-eu-britain-europe.html?_r=0
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