One of Europe’s most well-known economists just made a big call.
In a note sent to clients Friday Edwards says: “For me the biggest unforeseen impact of last weekend is that the Greek ‘agreement’ makes it far more likely that the UK will leave the EU after the 2017 referendum.”
The Tory government has pledged to hold a referendum on Britain’s EU membership by 2017, although the official party line is that the Conservatives are pro-Europe. Prime Minister David Cameron was forced into promising the referendum in the face of a swell in support for anti-Europe party UKIP.
Edwards’ big argument is that the treatment of Greece by Europe is likely to turn many of Britain’s left wing off Europe. The EU’s insistence on tough austerity measures in the face of mass unemployment and poverty is precisely the type of thing the British left have been campaigning against over the past five years.
The left have traditionally been the biggest proponents of Europe, while fractions of the right opposed the EU — most notably the Conservative splinter party UKIP. If the left desert the EU cause then the already close battle for UK public opinion could tip in favour of a Brexit.
Edwards points to an article by Guardian columnist Owen Jones and a report in the Telegraph as evidence of the “massive change that has taken place in UK politics over the past week.”
He goes on: “A groundswell has now started within the Labour Party to campaign to leave the EU.”
He concludes the note by saying: “For if even a Europhile such as I, who believes strongly in the unlimited free movement of labour across the EU, reaches the point at which he is likely to vote for a Brexit, I would think it is time for investors to prepare themselves for that momentous outcome.”
It might be wiser to take all this with a pinch of salt, however. Edwards is known for his massively pessimistic views, always declaring the next “massive change” or disaster is around the corner.
And while he believes there’s a “groundswell” in the Labour Party, it’s hard to see how he’s backing this up. The Party is in the midst of a leadership battle and is in disarray after a crippling election defeat. It’s hard to make any proclamations about the Party thinks right now.
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