Brexit would still shock markets, despite shift in polls

While the main talking point in recent days has been “Leave” taking the lead in EU referendum opinion polls, it appears that markets are still far from fully pricing in a Brexit. This suggests that the short-term market reaction following a vote to leave the EU on June 23rd would be substantial – although the turmoil might prove relatively short-lived, if we are right in expecting the resulting hit to activity to be smaller than many have warned.

Note, though, that is it not simply a case of whether the UK votes to stay in or to leave. In reality, whether the vote (in either scenario) is won by a small or large margin will have significantly different implications – not just for markets, but also for the economy, the direction of negotiations with the EU and the domestic political situation.