While the main talking point in recent days has been “Leave” taking the lead in EU referendum opinion polls, it appears that markets are still far from fully pricing in a Brexit. This suggests that the short-term market reaction following a vote to leave the EU on June 23rd would be substantial – although the turmoil might prove relatively short-lived, if we are right in expecting the resulting hit to activity to be smaller than many have warned.
Note, though, that is it not simply a case of whether the UK votes to stay in or to leave. In reality, whether the vote (in either scenario) is won by a small or large margin will have significantly different implications – not just for markets, but also for the economy, the direction of negotiations with the EU and the domestic political situation.
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