As REMAIN strengthens, will the market be proved right again?

It would appear that, three days out from the EU Membership Referendum, the market is taking a definitive view. REMAIN has never ceded favouritism but, in the middle of last week, looked as though it might. However a slew of positive polling news for REMAIN and a popular sense that the mood was inching back towards the status quo has forced the odds down to [1.31], equivalent to a 76% likelihood.

If REMAIN does win, particularly if by a decisive margin, it will be the strongest endorsement yet for betting markets as a political predictor. Why? Because frankly, before the weekend round of polls, there was very little publicly available evidence to justify it being favourite any more. Polls and momentum pointed towards LEAVE or at least a very close race, yet a huge gamble was resisted daily. Even the sainted pollster John Curtice said LEAVE should now be favourite just last Wednesday.

It would also vindicate the theory that voters swing late towards the status quo, in fear of change. Without doubt, expectation of this partly explains REMAIN’s resilience. Whereas polls are scientific and based on a snapshot of opinion, political betting markets are driven by gamblers taking a more subjective, longer view.

This is an argument I’ve made countless times over the past year and it certainly stands up over recent history. However in all honesty, I’m less certain it will apply this time. This referendum is nothing like any other in recent history and nobody can truly feel certain of the outcome.

There are many natural and obvious parallels to be drawn with the 2014 Scottish Referendum, which indeed saw that famous late swing to the status quo, but there are also some profound differences. First and foremost, I do not expect turnout to be anything like the 85% seen then. An optimistic assessment says 70%. The differentials between different demographic groups and supporters of each side could prove decisive.

Second, the identity dynamics are different. Defenders of the status quo in Scotland generally ‘feel’ British – they are no less motivated by identity than Scottish nationalists. EU membership may also be the status quo but few REMAIN voters feel ‘European’. The EU project does not, here at least, inspire much passion. The British relationship with the EU is a transactional one.

Pretty much all the recent evidence across the Western world points to a rise in identity politics, particularly nationality. LEAVE supporters, in my view, are much likelier to turn out on Thursday and my bets reflect that.

Another difference with this election is that the question is so complex, making it perfectly understandable that there are so many people undecided. It may be that opinion is far more responsive to an immediate reaction, thus creating the illusory perception of a decisive swing that isn’t necessarily sustainable once voters have had longer to consider.

The sense I got a week ago was that immigration had displaced the economy as the key issue – very bad news for REMAIN, who continue to struggle against the line of attack that says leaving is the only way to control our borders. Both David Cameron and Jeremy Corbyn struggled on TV yesterday regarding this, and today’s tabloid headlines make grim reading for them.

Critically, LEAVE’s argument was cutting through in Labour’s working-class heartlands – a vast swathe of England where turnout is usually low. With the Tories generally absent, Labour wins most of it’s seats by huge margins and there is very little incentive to vote. Yet one of the few pro-LEAVE Labour MPs, John Mann, predicts working-class turnout will for the first time ever exceed Middle England.

Whether that bold prediction comes off or not, I think Mann is onto something. From living in various parts of England, particularly Northern Labour constituencies, over the past 20 years, talking politics with people as is my nature, I have long believed there was a largely unheard segment of English society that would be open to the anti-EU message.

This is why I backed UKIP ahead of the curve but even their electoral appeal was always likely to be limited under our electoral system. The reason they only won one seat is because a bigger number were vehemently opposed to their agenda. In any case, politicians have never been less popular. A new party was never likely to be a panacea for mass alienation and anger.

A referendum on the nation’s future is wholly different. It is hard to see why, when so much of the country, led by the tabloid press and talk radio, have blamed the EU and immigration for all our ills for so long, that it’s opponents would spurn this once-in-a-lifetime opportunity to have their say.

Of course there is a flipside. The relentless emphasis on immigration has turned plenty of voters off. It is easy to forget that, until fairly recently, immigration was barely even part of the Eurosceptic argument. Now socially liberal, small government, free trade types who dislike EU regulations find themselves in an uncomfortable alliance with UKIP, Nigel Farage and even utterly toxic figures like Donald Trump!

Worse for LEAVE, the shocking and tragic murder of Jo Cox has raised the sceptre of an emerging, fascist Right, that would be emboldened by Brexit. Whilst it is totally unfair to equate her murderer with the LEAVE campaign or individuals within it, the simplistic association is very damaging and it was no surprise to see hints of a reactive poll swing over the weekend. At least nobody, in what has been a profoundly depressing campaign, seems to be seeking to make capital out of the tragedy.

My instinct is that, whilst there was an effect, it is only one of several playing out. One, predictably, is economic fears. It is always easy for the status quo to scare people with savings and investments that they can’t afford to take a risk.

Less so when it comes to voters who don’t feel like they have much to lose, and see no chance of that changing under the status quo. To this group, immigration scaremongering is likelier to hold sway. Whilst the government and status quo win on the first argument, they’ll lose on the second.

I’m sticking with my long-term view, that Remain will narrowly win after a late swing but do not expect a landslide. Turnout will be pivotal, and it will lead to LEAVE overperforming. My current positions are listed below. Before the vote, I’ll lay out any further betting or cover plans.


Remain 55% or more: -153 units

Remain 52.5 – 55%: +37 units

Remain 50 – 52.5%: +262 units

Remain less than 50%: +76 units

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