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25 Sep, 2015 12:56

Brexit may benefit UK financial sector – economist

Brexit may benefit UK financial sector – economist

Benefits to Britain’s economy are expected to outweigh a short term slump should UK citizens vote to leave the EU, according to a leading economics consultancy firm.

The impact of a ‘Brexit’ on the UK’s financial sector is likely to be a deciding factor for many voters. Despite warnings that leaving the single market bloc could catapult the City into a financial crisis, Capital Economics, a top research consultancy firm, has said a Brexit might actually hold long-term economic benefits.

“A British exit from the EU would probably hurt the City in the short term, but it would not spell disaster,” wrote Vicky Redwood of Capital Economics in a research note.

“The City’s competitive advantage is founded on more than just unfettered access to the single market. And an EU exit would enable the UK to broker trade deals with emerging markets that could pay dividends for the financial services sector in the long run.” 

Currently, opinion polls suggest most voters support remaining in the EU. However, in light of the continuing refugee crisis and growing “out” campaign efforts, numbers are liable to shift in the coming months.

The anti-EU group, Leave.EU, which has already amassed some 150,000 supporters, will be formally launched at a UK Independence Party (UKIP) conference on Friday in Doncaster. Backed by millionaire UKIP donors Arron Banks and Richard Tice, the group hopes to attract followers from across the political spectrum. Banks says the group is holding talks with trade unions. 

UKIP leader Nigel Farage has said his party will play a leading role within the Leave.EU campaign.

“What you are going to see today are all the different, disparate groups in this country who support leaving the European Union coming together,” said Farage. “We today formally will join hands and start the referendum campaign properly.”

READ MORE: UKIP’s Farage predicts 50/50 chance of ‘Brexit’

Prime Minister David Cameron pledged to hold a referendum sometime before 2018, asking voters if the UK should remain a member of the EU or not. Before holding the vote, Cameron has said he will try to seek reforms within the bloc, in an attempt to renegotiate Britain’s place in the union, increase the powers of national parliaments and give Britain more options to opt out of legislation.