We only have 72 days until the EU referendum on June 23 and the mixed messages are already coming in thick and fast.
David Cameron recently secured a deal to give the U.K. a special status within the EU. Will this be enough to keep the U.K. in the EU? What does the future hold?
Before we analyse the pro’s and con’s let’s have a quick history lesson and remind ourselves how the European Union formed and what has gone so horribly wrong, how is it possible, Mr. Churchill’s vision for the United States of Europe transpires into daily newspaper polls for Brexit.
The Founding Fathers of the EU inspired the creation of the European Union we live in today. Without their energy and motivation we would not be living in the sphere of peace and stability that we take for granted (yes you heard right! Take for granted). From resistance fighters to lawyers, the founding fathers were a diverse group of people who held the same ideals: a peaceful, united and prosperous Europe.
1) 1945 – 1959 A peaceful Europe – the beginnings of cooperation
The European Economic Community (EEC); is set up with the aim of ending the frequent and bloody wars between neighbours, which culminated in the Second World War. The six founders are Belgium, France, Germany, Italy, Luxembourg and the Netherlands.
2) 1960 – 1969 The ‘Swinging Sixties’ – a period of economic growth
It is a good period for the economy, helped by the fact that EEC countries stop charging custom duties when they trade with each other. They also agree joint control over food production, so that everybody now has enough to eat – and soon there is even surplus agricultural produce.
3) 1970 – 1979 A growing Community – UK joins the EEC
Denmark, Ireland and the United Kingdom join the EEC on 1 January 1973, raising the number of member states to nine. The EU regional policy starts to transfer huge sums to create jobs and infrastructure in poorer areas. The European Parliament increases its influence in EEC affairs and in 1979 all citizens can, for the first time, elect their members directly.
4) 1980 – 1989 – The changing face of Europe – the fall of the Berlin Wall
In 1981, Greece becomes the 10th member of the EEC and Spain and Portugal follow five years later. In 1986 the Single European Act is signed. This is aimed at sorting out the problems with the free-flow of trade across EEC borders and thus creates the ‘Single Market’. The Berlin Wall is pulled down and the border between East and West Germany is opened for the first time in 28 years, this leads to the reunification of Germany when both East and West Germany are united in October 1990.
5) 1990 – 1999 Four freedoms: movement of goods, services, people and money & Schengen
With the collapse of communism across central and Eastern Europe, Europeans become closer neighbours. In 1993, the Single Market is completed with the ‘four freedoms’: movement of goods, services, people, and money.
The European Union (EU) was established under its current name in 1993, following the Maastricht Treaty.
In 1995, the EU gains three more new members, Austria, Finland, and Sweden. A small village in Luxembourg gives its name to the ‘Schengen’ agreements that gradually allow people to travel without having their passports checked at the borders.
Millions of young people study in other countries with EU support. Communication is made easier as more and more people start using mobile phones and the internet.
6) 2000 – 2009 EURO currency introduced
The Euro is the new currency for many Europeans.
11 September 2001 becomes synonymous with the ‘War on Terror’.
EU countries begin to work much more closely together to fight crime. The political divisions between east and west Europe are finally declared healed when no fewer than 10 new countries join the EU in 2004, followed by two more in 2007.
A financial crisis hits the global economy in September 2008, leading to closer economic cooperation between EU countries.
7) 2010 – today!
The new decade starts with a severe economic crisis, but also with the hope that investments in new green and climate-friendly technologies and closer European cooperation will bring lasting growth and welfare.
What appears to be a harmonious and glorious relationship has ended in frustration, irritation and the general feeling ‘the grass is always greener’ on the other side. But, is it really! Let’s take a look at the pro’s & con’s if the UK leaves, then we’ll answer the question on all traders’ lips… how can I profit from this turmoil in the markets!
|Why does the UK want to leave?||Why does the UK want to stay?|
|UK Trading Goods & Exports
||EU Trading Goods & Exports
|Roaming Charges & Travel
Benefits potentially to be re-negotiated if UK operates alone.
|Roaming Charges & Travel
|Freedom to work / Workers’ rights
||Freedom to work / Workers’ rights
|From an employer’s point of view, immigrants from the EU tend to be better educated than UK nationals – around 32 per cent have a degree, compared with 21 per cent of UK citizens. From an economic perspective, people moving over from the EU since 2000 have contributed 34 per cent more financially to the UK than they have cost us.|
|UK Economic costs / Foreign investments
||EU Economic benefits
|UK Service Trades
||EU Service Trades
|UK No seat at the table
||EU seat at the table
| Immigration – Border Control in UK
|| Immigration – British moving to EU countries
In 2013, European Commission President José Manuel Barroso urged the British people to embrace Winston Churchill’s post–World War II vision of a “United States of Europe.”
Sure, Johnson’s decision drove the British pound to a seven-year low against the dollar and ignited a selloff in British stocks. Maybe that massive plunge in the value of the pound was simply a hallucination?
The results of the referendum over Scottish independence taught us that four months can be an eon when it comes to anything political, even weeks before that vote, markets were still penalizing stocks that had exposure to Scotland.
Emerging markets have suffered a meltdown, thanks to the collapse in commodity prices and contagion from China, among other factors. Europe has been battered by a succession of problems, from Greece’s economic collapse and the banking crisis, to the current political challenge posed by the wave of refugees flooding the region. In Japan, “Abenomics” has delivered only unsteady economic growth.
There is plenty of room for things to change, 72 days is a long time and anything can happen.
So yes, there is room to make money but that doesn’t mean you should be trading on every piece of news. Uncertainty fuels fear and anxiety, some people could incur some big losses due to an inability to respond to the rapidly changing markets. As we know, the market can move up, down or sideways, the secret is using the right strategy for it to go in your favour.
Which way is best! Only the public can decide on June 23 with the historic referendum on British membership in the EU. The choices are essentially “in” or “out.”
For those in the ‘STAY IN’ camp
If Britain leaves the EU, the impact will be “seismic”, said Neil Kinnock, a former EU commissioner, this week. Brexit would be “a jump off the edge of the cliff … in which our economic stability is hugely put at risk”. The message couldn’t be clearer: leaving would be economic suicide.
And finally, the question, how can I make a profit if we stay?
George Soros made a cool 1 billion pounds in 1992!
BUY PUT on GBP.USD
By risking only 100 dollars, you could make 50,000!
For those in the ‘GET OUT’ camp
Over in the Eurosceptic camp, we’re told our liberation from the tyranny of Brussels will bring us a new era of prosperity, saving billions on payments into a wasteful and corrupt EU bureaucracy, slashing immigration and restoring the country’s economic independence.
But how can I make a profit if we leave?
BUY CALL on GBP.USD
By risking only 100 dollars, you can make 50,000!
If you do not have a view, do both, a put and a call. You can make money whatever happens, just not as much.
Make up your own mind about whether you think the British public will vote IN or OUT. I have tried to give a balanced viewpoint, you might agree, if you disagree that’s fine too, all depends what paper you read! I am new to analysing the markets, and it’s only fair I let you make the choice which is why I’ve given two strategies. You don’t have to get it 100% right but as soon as a story like this unfolds a good trader knows how to react and turn News into Profit.
Source: BBC, The Guardian, JP Morgan, HSBC, Europa, Cambridge University
The analyses and strategies described are for informational purposes only and should not be considered as investment advice or an indication to the purchase and / or sale of any financial product . Any information provided should not be considered as a reliable indicator of future results and the decision to operate on the basis of these suggestions it is at the sole discretion of the reader .