Brexit

source: Le Monde

author: Eric Albert

translation: doxa-louise


The City applauds a conservsative victory, in spite of a 'Brexit' risk
For those of the City, it is a moment of relief. Given the strong victory for the Conservatives at the legislative elections of May 7, David Cameron is staying at Downing Street. For the management class, one thus lessens the chances for higher taxes on the rich and a special tax on the bonuses of bankers, two proposals from his opponent, Ed Miliband.

On the announcement of victory, the British Pound continued its ascent with respect to the dollar Friday, as well as with respect to the Euro. As for the Stock Exchange, it too was going up. "We are seeing a positive opening as the Conservative Party seems to have won the election with a higher margin than expected, opening the possibility of an absolute majority for the outgoing Prime Minister, David Cameron", pointed out Mike van Dulken and Augustin Eden, analysts with Accendo Markets.

For five years, Mr Cameron has ceaselessly professed a welcoming position with respect to foreign investment and large companies. He has lowered from 28% to 20% the tax on business, and many have credited him with turning the British economy around.

Business interests, in particular American multinationals and Asiatic ones which use the United Kingdom as a European base of operation, worry that the United Kingdom might eventually leave the European Community(EC). Mr Cameron has promised a referendum, no later than 2017, on staying or leaving the EC, and will honor it.


"Negative Consequences"
And even though many bosses are inopportuned by all the regulation coming out of Brussells, making their backing for the EC ambivalent, they are overall against the 'Brexit'.A recent survey among employees of the city shows that 73% of them would vote for staying with the Twenty-Eight.

Outside of the financial sector, the British econom y risks being destabilized by leaving the EC, believes the rating agency Moody's: "The EC accounts for 50% of Britains's exports for goods and 36% for services, and withdrawl could have negative consequences for commerce and investments".

These possibilities have had little effect on the financial markets. There has been something of an air hole in the market this past month, but this is a global phenomenon. The bonds emitted by the United Kingdom continue to sell well. Only the pound sterling has known a somewhat more agited period. And although it has gone down with respect to the dollar, it remains high with respect to the euro.