A Brixit is now a real possibility

Chief Market Strategist, Cantor Index

IN 2001, Tony Blair sought a second mandate from the electorate before 9/11, which would eventually lead to war in Iraq. Blair’s re-election seemed more or less a foregone conclusion. He was still fresh-faced, energetic and was brilliant at selling his aspirations for social reform, which sadly never really transpired.

At the time, just before setting up Cantor Index’s political spreads, I remember taking counsel from the excellent Nick Moon, the guiding light behind the polling company GfK/NOP. He was always fantastic at discerning the political wheat from the chaff – in other words what was relevant and what wasn’t. His knowledge had always been invaluable.

It was becoming apparent that New Labour was falling in love with the idea of the UK’s greater involvement in the EU. I think the then Prime Minister had aspirations of becoming Emperor of Europe. Certainly that perception rattled a few cages in the City and, until Moon put me right, I thought Blair’s personal ambitions were relevant to the outcome of the 2001 election. He told me that, at the time, only 6 per cent of the electorate gave any consideration to the European debate, while a full 80 per cent cared about the economy and their disposable income. How right he was.

Today there is much more concern over the UK’s participation in the EU in the wake of the Eurozone’s debt crisis. It has certainly galvanised Ukip, which has usurped the Lib Dems in the polls, with between 12 and 15 per cent of public support. More to the point, the party has split the Tories in sunder. Whether this is just a mid-term blip is debatable.

Barack Obama has suggested that the UK’s non-participation in the EU would greatly weaken the UK’s voice on the global political stage. But the President would say that, as he wants us all in his playpen, where he can keep his tabs on us as a unit. The City is also concerned that it will lose its vice-like grip on financial markets. Europe is now a key political issue. Should the UK be in or out or “in and obstructive”? That is the question. This ongoing debate is likely to make foreign exchange, bond and equity markets very volatile and challenging for the spread-betting fraternity.

Cantor Index is hosting a debate at the Bloomberg Auditorium on Wednesday 9 January 2013 at 6.30pm, with a galaxy of experienced orators – Rt Hon Sir Menzies Campbell MP, Rt Hon David Blunkett MP, Nigel Farage and Peter Oborne. It’s free. Get involved at www.cantorindex.co.uk