EU referendum: Leave or Remain, which is the biggest threat to your wealth?

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Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.

With the Brexit voices seemingly taking a lead in the polls, over the weekend we asked our list of high net worth and sophisticated investors whether leaving Europe or staying in Europe was the biggest threat to their wealth.

52% of high net worth individuals indicated that leaving Europe was the biggest threat. 

Many cited an expected fall in the FTSE and a fall in sterling. 

With politicians on both sides of the Brexit debate fudging the figures to suit their own argument, investors are being left to wade through the hyperbole and make their own analysis of what the implications are of the referendum outcome. It is clear the markets are nervous with the FTSE 100 falling 2.4% last week and sterling falling 1.9% against the dollar and 0.9% versus the euro.

It was interesting to note some of the reasons given, on both sides of the debate, as to why respondents thought a particular way.

Leaving is biggest threat to wealth

  • Exports and corporate profits falling
  • The UK having a lower credit rating, pushing up debt servicing costs
  • Leaving a large free trade zone makes no sense
  • House prices may fall
  • Too many uncertainties

Staying is biggest threat to wealth

  • Low growth rate is due to inflexibility of EU economies 
  • Too much regulation and mismanagement
  • Undemocratic politicians who are anti commercial
  • UK better off growing trade with the rest of the world and not the EU
  • Europe is bankrupt

50% of high net-worth investors have put off making any new investment decisions with a further 20% either selling or investing less than usual. As well as investing less, many have been moving their assets out of sterling to counter any sharp fall in the currency in the event of a vote to leave.

It is clear that the Brexit debate is damaging investor confidence. Stock markets have slipped back in recent weeks and in the currency markets sterling is having a bumpier than usual ride. Over the last month sterling is flat against the euro and dollar, however that masks big swings, largely dependent on the latest opinion polls. The sooner the vote is out of the way, the sooner normality can return and investors can plan their long term investments.

Photo credit: Descrier

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Which do you think is the biggest threat to your wealth? Remaining in Europe or leaving?

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