David Cameron finally showed the public his draftproposal to change the UK’s relationship with the European Union on Tuesday — and was immediately showered with criticism from the public, the opposition, and even politicians within his own party.
But there’s one investment bank, Bank of America Merrill Lynch, that thinks the EU deal will not prompt a Brexit. This seems a bit counterintuitive when you look at the fallout from the draft deal and the polls.
Firstly — what is the draft EU deal? Well, there are four components, which you can read here, but the biggest issues that people care about is the sections related to immigration.
- There will be an “emergency brake” that will stop EU migrants from being paid in-work benefits in full for fours years.
- Britain would be allowed to work with other parliaments to stop EU laws being made. Known as the “red card” it will mean that if 15 EU countries club together, they can block EU legislation
Politicians and many vocal members of the public were disappointed and said “is that it?.” Just take a look at the front page of the newspapers today.
Meanwhile, Britain’s opposition leader Jeremy Corbyn stood up in parliament and said Cameron is “not respecting the sovereignty of this parliament” by refusing to show up to tell politicians about EU proposals. One of Cameron’s own Tory colleagues, MP Steve Baker, said the plan was akin to “polishing poo.”
Former Tory politician Louise Mensch was so incensed by the lack of deal that she spent hours on Twitter rallying people to vote for a Brexit because of the lack of deal.
But Robert Wood and his team at BAML seem to be optimistic in their note, which was published on Tuesday night following Cameron’s speech (emphasis ours):
“Overall we believe today’s events could reduce the risk of the UK exiting the EU but there remain a number of issues and uncertainties yet to be addressed.
“We reiterate our view that an exit from the EU would have significant negative implications for the UK economy.”
Sure — BAML mentions that:
Some key questions are likely to be: when will the new arrangements be implemented; how legally water-tight will it appear to be; which measures require treaty change further down the line?
But its claim that the deal, as it stands, could reduce the risk of Britain leaving the EU is a bit of a punt.
This is considering before the draft deal was released, and before the anger spread regarding the deal, the vote to leave the EU was winning in the polls.
HSBC economist Elizabeth Martins released a note on Wednesday morning highlighting how close votes are, after taking into account several polls from several sources:
She also pointed out that those who were inclined to vote to leave the EU are consistent which does suggest that “Vote Leave” has a strong foundation of votes which can be added to:
However, until a new poll is conducted following Cameron’s speech, only then we will see if BAML’s optimism for the public and MPs accepting the draft EU deal will be a reality or just wishful thinking.
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