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Business

UK Pound Plunges as Referendum Results Point to Brexit

The Betfair market predicted an 81 percent chance of Britain leaving the EU, and bookies made Brexit the favorite outcome for the first time

A teller counts ballot papers at the Titanic Exhibition Centre in Belfast, Northern Ireland, after polls closed in the EU referendum Thursday, June 23, 2016, photo:PA/Liam McBurney via AP
1 year ago

LONDON — The British pound plunged to a 31-year low Friday as results in the country’s European Union referendum gave the “leave” side a small but growing lead.

The figures delivered a deep shock to financial markets, overturning earlier anticipation of a narrow victory for “remain.”

The pound initially soared as polls closed and two opinion surveys put “remain” ahead and two leading supporters of the “leave” campaign said it appeared the pro-EU side had won. But it then suffered one of its biggest one-day falls in history, plummeting more than 10 percent in six hours, from about $1.50 to below $1.35 as results suggested a strong possibility the U.K. would vote to quit the bloc.

“The dawn is breaking on an independent United Kingdom,” U.K. Independence Party leader Nigel Farage said to loud cheers at a “leave” campaign party.

“Let June 23 go down in our history as our independence day!”

Britain-EU_Envi-(2)

United Kingdom Independence Party leader, Nigel Farage, arrives to cast his vote in Biggin Hill, south eastern England, Thursday, June 23, 2016, as voters head to the polls across the UK in a historic referendum. Photo: PA/Gareth Fuller

As results poured in, a picture emerged of a sharply divided nation: Strong pro-EU votes in the economic and cultural powerhouse of London and semi-autonomous Scotland were countered by sweeping anti-Establishment sentiment for an exit across the rest of England, from southern seaside towns to rust-belt former industrial powerhouses in the north.

“A lot of people’s grievances are coming out and we have got to start listening to them,” said deputy Labour Party leader John McDonnell.

The “leave” campaign had a lead over “remain” with about 70 percent of voting districts reporting. Turnout was above 70 percent — higher than the 66 percent in last year’s general election.

“Few ‘remain’ strongholds are doing better than expected,” said John Curtice, a University of Strathclyde political scientist and BBC election analyst. “There are far more places where ‘leave’ are doing better than expected.”

“It may be possible that the experts are going to have egg on their face later on tonight,” he said.

A vote to leave the EU would destabilize the 28-nation trading bloc, created from the ashes of World War II to keep the peace in Europe. A “remain” vote would nonetheless leave Britain divided and the EU scrambling to reform.

The Betfair market predicted an 81 percent chance of Britain leaving the EU, and bookies made Brexit the favorite outcome for the first time.

The first results, from England’s working-class northeast, were a smaller-than-expected “remain” win in Newcastle and a bigger-than-expected “leave” vote in nearby Sunderland. The “leave” side also outperformed expectations in other areas of England, though “remain” was ahead in early Scottish results.

There was better news in London, where many areas had strong “remain” majorities.

As polls closed Thursday, pollster Ipsos MORI said a survey conducted on Wednesday and Thursday suggested the “remain” side would win Britain’s EU referendum by a margin of 54 percent to 46 percent.

Earlier Thursday, the firm had released a poll that indicated a 52-48 victory for “remain.” That phone poll of 1,592 people had a margin of error of plus or minus three percentage points. But the firm’s chief executive, Ben Page, said continued polling on Thursday suggested a bigger swing to “remain” that gave the 54-46 result.

As polls closed, Farage set a downbeat tone for the supporters of a British exit — or Brexit — from the EU, telling Sky News television “it looks like ‘remain’ will edge it” in the referendum, sending the pound to a 2016 peak of $1.50.

But he walked back those comments later, telling reporters at a “leave” party in central London that “maybe just under half, maybe just over half of the country” had voted to pull Britain out of the EU. And by early morning he was declaring the dawn of a new era.

People make their way along a flooded path as they arrive to vote at the polling station in East Hanningfield, Essex, England, Thursday, June 23, 2016 as torrential downpours and flooding have swamped parts of London and the South East in the early hours of EU referendum day. Photo: PA/Nick Ansell via AP

People make their way along a flooded path as they arrive to vote at the polling station in East Hanningfield, Essex, England, Thursday, June 23, 2016 as torrential downpours and flooding have swamped parts of London and the South East in the early hours of EU referendum day. Photo: PA/Nick Ansell via AP

The high turnout had been expected to boost the “remain” vote, because “leave” supporters are thought to be more motivated. But high turnout in working-class areas that typically have lower tallies could also boost the “leave” vote.

“I think it is going to be really close,” said photographer Antony Crolla, 49, outside a London polling station.

That was certainly the case in Newcastle, a city which had been expected to deliver a resounding victory for “remain.” Instead, the pro-Europe side squeaked by with 50.7 percent of the vote. In Sunderland, 61 percent of voters chose “leave,” a bigger-than expected margin.

Polls had for months suggested a close battle, although the past few days have seen some indication of momentum swinging toward the “remain” side. But torrential rains, especially in the “remain” stronghold of London, raised fears of diminished turnout. London’s Fire Brigade took 550 weather-related calls as the capital was hit by heavy precipitation, thunderstorms and lightning strikes. Some polling stations were forced to close because of flooding.

Prime Minister David Cameron, who called the referendum and led the “remain” campaign, faces an uncertain future whichever side wins. Almost half the lawmakers from his Conservative Party backed an EU exit, and the “leave” campaign was led by potential leadership rivals, including former London Mayor Boris Johnson.

If “leave” wins, he may have no choice but to resign.

“If the prime minister loses this I don’t see how he can survive as prime minister,” said Scottish National Party lawmaker Alex Salmond. “Talk about lame ducks. This would be a duck with no legs and no stability whatsoever.”

At a referendum night party at the London School of Economics, Kevin Featherstone, the head of the European Institute, said that whichever way things went, the vote should serve as a wakeup call to politicians across the continent.

“One of the deeper headlines from tomorrow, of a narrow victory either way, is that wider Europe has got to learn the lesson about how to re-engage with ordinary publics,” he said. “We can see across Europe countries which have been … far bigger supporters of the European Union for a number of years starting to have serious doubts.”

RAPHAEL SATTER
JILL LAWLESS

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