What Should Investors Expect from the EU Referendum?

David Cameron has confirmed the British public will vote on whether the UK should remain part of the European Union by the end 2017, what outcome should we expect?

Jose Garcia Zarate 2 June, 2015 | 12:47AM
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Jose Garcia Zarate: We don’t know when, but at least we know now for sure that the U.K. will be holding a referendum on its membership of the European Union. Whenever it comes, Britons will be asked a very straightforward question, should the U.K. be a member of the European Union?

For now on investors, not just here in the U.K., but also elsewhere, will be scrutinising opinion polls to get a view as to the likely results. Understanding of opinion may actually have an effect on U.K. financial markets. So let's have a view of what the opinion polls are currently telling us.

To a very straightforward In and Out question such as the one that will be put forward in the referendum, most Britons are currently favoring the ‘In’ option. This may come as a bit of a surprise. However, talk of a referendum increased throughout 2014 and opinion started to shift.

Interestingly over the past 18 months, opinion polls have also been tracking answers to the following question. If the U.K. were to renegotiate its terms of membership, would you want to remain or leave the European Union? As we can see in this graph, in this case the ‘In’ option is overwhelmingly favourite. Now, it's probably early days, and we know that opinion polls in the U.K. have taken a bit of a battering after wrongly calling the results of the U.K. general elections, so perhaps these findings needs to be taken with a pinch of a salt.

However, it would seem as though faced with a real threat most Britons are unwilling to take the risk of leaving the EU.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Jose Garcia Zarate

Jose Garcia Zarate  is Associate Director of Passive Strategies Research for Morningstar Europe

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