Tuesday, 14 June 2016

Market panic, as Brexit takes lead in handful of polls

£80bn wiped off London stock markets in four days, as odds on Brexit jump.

Photo by Images Money (Flickr) / CC BY

Nine days out from one of the most anticipated votes in post-war British history, markets are in a state of fear, as a flurry of opinion polls indicated that the UK might exit the European Union on June 23rd.

Today alone, pension pots will have felt a pinch, as the FTSE 100 shed 2% of its value. Betting markets have been fairly relaxed about the likelihood of a Brexit, having claimed just over the weekend that it was only a 25% possibility.

The price of Gold in GBP has jumped to £900 per ounce in recent days, as a reflection of investors seeking hard assets, during a period of economic uncertainty. To compound all this, Rupert Murdoch's best-selling newspaper the Sun has come out in favour of Brexit.

Mr Murdoch's editorial decision is intriguing, given that the Sun has the habit of coming out in support of the party that would go to win every election since 1979.

Where did this sudden tumble in markets begin? Cue an avalanche of statistics from multiple polling agencies over the weekend. They were enough for some to consider that the calculus has shifted. Now betting odds on a Brexit have risen to roughly 40%. 

However, Number Cruncher Politics, an independent psephology stats site claims the gap is just a bit wider.

NCP has seen the likelihood of a Brexit rise in recent days, but it estimates that there's actually a 33% likelihood of a Brexit. It is important to note that NCP was hailed for foreseeing the controversy over inaccurate polling in the run-up to the May 2015 general election.

So where does this leave us? The most important things to consider, when reading an opinion poll on the EU referendum are the following: 

1.) Does the poll include or exclude voters from Northern Ireland? 

If NI voters are excluded, there's a chance the poll is skewed somewhat. Polls carried out exclusively inside Northern Ireland find support for remaining in the EU far exceeding support for a Brexit.

2.) Polls are the political equivalent of breath on a pane of glass; things happen and views change

Peter Kellner, former President of YouGov writes in the Staggers that past referendums in the UK have tended to see a last-minute boost in support towards the status quo, whatever that may be.

The headlines are filled with a curious paradox; on one hand, people are confident a Brexit is so unlikely, that they're willing to bet money on Britain staying, and yet on the other, the markets are so jittery.

Only nine days to go, till the biggest poll of them all comes to town.

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