Treasury warns on Brexit

As the official EU referendum campaigns got underway on Friday, a report out this morning from the treasury claims that in the case of a Brexit, the UK economy could shrink by 6% by 2030, costing each British household the equivalent of over £4,000.

Likely to be dismissed as more government propaganda by ‘out’ campaigners, the report, which has taken government economist months to write, the report does however highlight the economic risks associated with a Brexit and is likely to cause more problems for the Pound if polls show the referendum result to be uncertain. Last week some opinion polls had the result as neck-and-neck between those voting to leave and those voting to stay.

The report analysed 3 possible scenarios for the UK’s relationship with the EU after an exit, and found that all 3 would have a significant negative impact on growth, jobs and economic prosperity.

The Pound in fact remained relatively strong against the Euro towards the end of last week, although the gains made on Wednesday and Thursday were partially lost on Friday. Sterling is lower this morning as the FTSE fell on lower oil prices, falling 0.4c against the Euro by 8am.

This week we have very little in the way of data, particularly from the UK, until Wednesday’s unemployment and Thursday’s retail sales. There is nothing of note released at all today, before we hear speeches from the central banks in Australia, Canada and the UK tomorrow.

Today
No major data

Tomorrow
0230 – Reserve Bank of Australia minutes
1430 – Reserve Bank of Australia speech
1535 – Mark Carney speech
1600 – Bank of Canada speech

Wednesday
0930 – UK unemployment
1500 – US home sales

Thursday
0930 – UK retail sales
1245 – Eurozone interest rate decision & press conference

Friday
1430 – Canadian inflation