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Here's a question that suddenly became a new worry for global markets: Do the British want to leave the EU?
Late Sunday evening, Mayor of London Boris Johnson revealed he would vote in favor of the "Brexit" (a British exit from the European Union) in Britain's EU membership referendum scheduled for June 23.
His comments sent the British pound tumbling down 1.85% on Monday – a seven-year low – against the U.S. dollar. It ended its plummet at $1.42 from $1.44. This kind of market reaction, reported Fortune yesterday, indicates that investors are spooked by the uncertainty surrounding a Brexit.
You see, despite the euro crisis playing out right now, the EU is the world's largest market. If the European economy is adversely affected, it will have substantial ripple effects on global markets.
This uncertainty is one reason British Prime Minister David Cameron has been pushing for Britain to stay in the EU…
He made a statement Monday afternoon in response to Johnson's declaration. Addressing the House of Commons – the lower house of Parliament – Cameron warned that leaving the European Union "could hurt working people for years to come," reported BBC News.
The "Brexit" argument (and subsequent referendum) centers on the idea that belonging to the European Union either undermines British "sovereignty" – or it doesn't. Those who want the Brexit hope that the UK would be better able to control immigration without EU bureaucracy interfering. Furthermore, pro-Brexiters believe the UK would be able to conduct its own trade negotiations, free from unnecessary EU regulations.
Those in favor of remaining in the EU argue that leaving would risk the UK's influence in world affairs – and result in trade barriers.
Johnson's and Cameron's public rift has created a split between members of the same conservative party.
That rift is just as apparent among the citizens of Great Britain…
According to a Feb. 20 IBTimes survey, the British public is almost evenly split on the issue of a Brexit of as well…
The Markets Will Crash Again: The cracks are already showing. But the impending collapse is also an opportunity. By understanding these five "Super Crash" inevitabilities and making key adjustments, investors can protect their portfolios from the downside while positioning for the upside. This is your last chance to act before it's too late…
- BBC News: Pound Hits Lowest Level Against the Dollar Since 2009
- IBTimes: EU Referendum: Brits Divided Over Possible 'Brexit' Despite David Cameron's EU Reform Deal