Potential ‘Brexit’ Continues To Cause Uncertainty
The world is a very uncertain place at the moment. Probably more uncertain than at any period in the post-World War Two era. Obviously, aside from China’s seemingly inexorable economic slow-down, the possibility of a “Brexit” is a major source of global economic uncertainty. And, just to add to the intrigue, the possibility remains that if the British people vote out of the European Union on June 23, Britain itself could actually remain in. This is because the referendum result is not legally binding on the UK Government, or the EU for that matter. Remember the national referenda on the Lisbon Treaty, which took place almost 10 years ago? After voting against the Treaty, the voters of Ireland, Denmark and the Czech Republic were respectfully invited by the EU to go back to the polling booths and make the “right” choice next time.
Still, even though voters have a binary choice, there is the possibility of a “third” result, that the British Government takes the no vote to Brussels and attempts to extract substantially improved concessions in order to remain a member. However, if Britain did vote out, this leaves us with another intriguing possibility – a possible change of leadership in the UK. The only thing we can say with any certainty come June 24 and “Brexit” is declared, is that nobody knows what will happen next. And there is a whole spectrum of possibilities to consider. However, most level-headed economists do seem to be predicting at least some short-term economic disruption in the UK, which could blow the Government’s fiscal consolidation efforts further off course, and necessitate a mixture of tax hikes and spending cuts to correct things.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look