BREXIT: Everybody is bluffing

Europe fears Britain again. It fears because the British banks are threatening to leave Britain because of the BREXIT. Media are full of news that the British banks are paying roughly 60 bn. pounds to the budget and they make 10 % of GDP. If they leave it will be a catastrophe. Banks are creating fear using PR agencies and forcing politicians to do something and looking for economic exceptions for their segment. They simply used this tensed situation to unleash lobbying to their advantage. Politicians see right through them and they refuse to accept the so-called soft BREXIT because the voters voted for so-called hard BREXIT.

In this pile of bad news I can see at least one good one too: Businesses want united EU because they want united markets so from this point of view they are clearly saying that it is worth to fight for EU – except the voters see it differently and they don’t want united EU because they don’t want the European migration policies and a joint European funds. So the businesses want something that voters don’t care for and voters want something that doesn’t interest the businesses much. From this, I assume that if the Brussels pressured less the political integration and more the economic liberalization everybody would be satisfied! (Well everybody but the Brussels where would all the European leaders lose their power.)

In any case, the fear sent the British stocks down and the pound is depreciating again. Since BREXIT it appreciated against the dollar 18 % and against the euro 16 %. That is a lot and. I assume that now when the fast BREXIT didn’t happen right after the vote, slight pressure on pound will continue. Until the markets fear that the banks and industrial businesses will leave Britain the pound is going to depreciate. I think that only game of poker is being played in the media right now. Everybody is bluffing. Where would the banks go? Will they go to the continental Europe where they are constantly being threatened by special taxes for the financial sector and financial transaction tax? Or will they all stay in Britain at the end which is even considering lowering the corporative taxes? The pound will come back there’s no doubt about it. On top of that, its weakness will keep helping the British industry in following months. In a year the pound is going to be stronger than it is today.