The Impact of Another Referendum on the British Pound

The Brexit referendum in 2016 caused an immediate 20% drop in the value of the British Pound, a significant event that no other developed nation had previously witnessed. Six years later, sterling still trades in that lower range, indicating a persistent impact on its value. Clearly, the rest of the world understood what half of the British population did not—Brexit was a disaster.

The Rejoin Camp's Impact on the Pound

Should the rejoin camp emerge victorious with a large enough majority—say, 65% or more—to convince the EU that it makes sense to rejoin so soon after Brexit, the value of the pound would rise significantly. However, an application for rejoining the EU is unlikely to occur before the mid-2030s. This is because the current mindset strongly believes in the principles of Brexit, and any attempts to reverse it would be met with significant resistance.

The Consequences of a New Referendum

If a new referendum were to be announced, it's likely that the pound would start rising against other major currencies. However, it might not reach the pre-referendum levels due to lingering uncertainty. While unofficial polls may suggest a Remain victory, this is never a guarantee. Even a narrow win for the Remain camp would leave speculators apprehensive about the future of the currency.

Impact on the Pound's Value

Depending on the outcome of the referendum, the pounds value may increase if the UK votes to remain in the EU. This would ensure that we can all enjoy our holidays in the sun without counting too many pennies. On the other hand, if the UK decides to leave again, the pound would likely dive, placing the UK in a position similar to Argentina in terms of its economic stability. The economy would continue to function as long as the products remain superior or cheaper than their competitors.

Economic Impact and Trade

The immediate impact of such a referendum would be a drop in the pound's value as traders react to any uncertainty. Once traders realize this is just another Brexit-related calm period, the pound would likely rally again. This initial drop would stimulate exports, leading to a rise in UK production. The main advantage of trading within the EU is the absence of import/export duties. Outside of the EU, these duties are determined by respective governments, which can significantly affect trade.

Moreover, if goods coming into the UK from the EU were subject to import duties, locally produced equivalents would become more competitive, stimulating domestic production. This could even entice foreign manufacturers to invest in local production facilities to feed the UK market, thus boosting the economy further.

In conclusion, while a new referendum would likely bring about fluctuations in the pound's value, the ultimate effect on the economy would depend on the choice made. A rejoining of the EU would stabilize the pound and the UK economy, while another vote for leaving would likely lead to more volatility and potential economic downturns.