BREXIT – What Next?
Like many I awoke to the news this morning that Britain has vote narrowly to leave the EU. Already markets are in turmoil and commodities have been impacted by that turmoil with a rush to Gold and falling Oil prices. I have thought about doing a BREXIT blog post for months but the problem is, I really have no idea as to how this will all work out and what the long terms implications might be. I fear I am not alone in this. The process to leave will take a full two-years and hopefully we will see some clarity over time but, like any divorce, one has to imagine that it will be a costly, argumentative and chaotic ride and, will take years to recover from.
What it does to commodity markets in the longer-term is difficult to say. While the EU has driven towards a single energy market and more governance via regulation, I can’t see much changing in terms of the UK market infrastructure or regulatory regime in the future. I think perhaps one of the bigger issues will be to see if this now sparks the disintegration of the EU as a whole. Already various political groups in other countries are pressing for their referenda. It may also have an impact on Russian gas as if the EU no longer acts a single voice, the Russians may find it easier to negotiate deals with individual countries?
It is simply too early to know what impact this has on anything at the moment.
One point of interest however, is that despite the polls and pundits predicting a ‘Remain’ majority and being wrong, one ‘poll’ got it right. Google, using analysis of search terms in its search engine, predicted a landslide BREXIT vote. While it got the magnitude wrong, it got the result right and it simply reinforces how social media and data on the internet usage can be used in sentiment analysis.
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