UK on course to remain in EU – top economist
EURO sceptics angling for a British exit of the EU are heading for a crushing defeat according to one of the UK’s leading economists.
The head of the investment office of UBS Wealth Management UK, Bill O’Neill visited Manchester to deliver his report “The UBS House View: 2016 and Beyond”.
O’Neill correctly predicted the rise in US interest rates on December 16 and believes the will UK follow suit in May next with another hike following the “in-out” EU referendum, which he expects to be in the autumn.
“The UK will retain its EU membership, with only 10% to 20% favouring an exit,” he said.
“I expect the vote to be in September or October. The Government wants it out of the way as soon as possible.
“The Prime Minister David Cameron’s view are considered to be important, but there is an in built conservatism and inertia among the British public.
“The process of pushing for reform (by Mr Cameron among EU leaders) is a means to an end and is about the public view on how it sees our membership of the EU evolving.
“There is no sense that the alternative – a UK exit – has been formulated in a way that is seen as convincing.
“It’s an emotional debate and migration is part of the argument, but our view is that we will maintain our membership. The vote could be 55% to 60% in favour.”
O’Neill predicted GDP buoyant growth in the UK and no slump in the next three years.
“In 2016 we foresee a predominance of domestic led growth and manufacturing will improve and rising employment. Even with a small rise in interest rates the cost of credit will remain low.”
Regional head of UBS Wealth Management Karan Sejpal backed up O’Neill’s comments when he said anecdotal evidence suggests businesses around the region are feeling “very optimistic” about the pathway ahead.
“I have been in Manchester since 2004 and I have no doubt that when we look back on that period we are in now, this will be a very special time,” he said.
O’Neill said the rosy picture was helped by the Eurozone which will have 1.8% growth in 2016 – its best performance since 2009.
“We will be behind the US, but ahead of the Eurozone,” he said. “Inflation will remain low – probably at 1% until Q3 in 2016 – while the oil price remains at its current level.
“Inflation will pick up over the year, albeit modestly, while Chinas will slow down, but it will not be hard landing.”
O’Neill said the emerging markets were getting “close to the trough, while the political situation nationally and internationally could be a source of potential volatility.”
