Odds on Brexit

I posted before about David Bell’s analysis of the Scottish referendum bookies odds. The bookmakers seemed to do a good job not overreacting to the late poll numbers showing a marked swing to Yes. The days before the referendum were throwing up some dramatic poll results but the odds did not adjust as dramatically, implying the bookies were either temporally averaging across polls, had some priors about the quality of the polls, or were doing a degree of Bayesian updating or something similar. David has provided a nice piece here for those looking to keep track of bookies odds for Brexit. For now, it looks like Stay is the favorite by quite a margin and more than one would think just by looking at opinion polls.

24 replies on “Odds on Brexit”

Punters tend to weight opinion polls (intuitively) according to how likely they think certain groups are to actually vote a particular way, rather than merely give a particular answer to a pollster.

Securities and FX markets do this too.

Just one point:

“On the other hand, Iain Duncan Smith’s resignation was arguably a surprise, but it had little impact on the odds. This suggests that those placing bets did not feel this event would have a significant effect on the referendum outcome.”

IDS did not resign to influence the Brexit campaign, apart from anything else even he realizes he has almost no popularity among the general public and would not have expected his resignation to affect the likelihood of Brexit. He was peeling off from the Osborne wing of the party, having found them too economically right-wing and found himself having to take much of the flack for them.


IDS is older than Osborne and probably has a better feel for how much more economically incoherent crap the public will take from the Tories. 2600 disability benefit claimants have committed suicide since the cuts started.

This was in the Guardian a while ago :

“The poor often make themselves worse off by poor choices, apparently. Then their worlds can fall in and things no longer work at all, just like the cheap fairy lights these kind of people buy.

I am stuck on this phrase because it’s what Gideon said when challenged about the choices he was making, cuts that the Institute for Fiscal Studies say would mean cutting the size of the state to pre-war 30s levels. He said the BBC had been hyperbolic about spending cuts: “I had all that when I was interviewed four years ago, and has the world fallen in? No, it has not.””


Complacency is not good.

Both the Fed and the BoE are engaged in Potemkin macro, claiming inflation where there is none . The lack of inflation is because of the structural factors that have led working classes to have lost so much over the last 30 years. 45 million Americans are on food stamps.

Economic progress now looks like the real thing and may even taste like the real thing

but it’s fake. IDS probably knows that. The backlash could be severe. Remember when the NoTW collapsed and how quickly an all powerful institution was abandoned by the PtB ? Hell hath no fury like an electorate shafted.

Brexit isn’t generating any decent momentum. Gary Lineker was on the grauniad the other day

“we’re a negative society in many ways, or we can be. Sometimes it’s good, in the sense that we’re very self-deprecating as a nation, which kind of works, especially with our footballing success, but … we don’t have that positive energy”

Brits will moan til the cows come home about Europe but they won’t take the plunge.

I haven’t decided how to vote.

Although it might well be economically beneficial for London and Southern England to exit the EU, as this part of the UK could prosper on its own,, I think it would be economically very bad for the far-flung UK regions like Scotland, Wales and N. Ireland, so I’d normally be fully in the ‘Remain’ camp.

However, depending on the composition of the vote, there is a chance that a ‘Leave’ victory could lead to Scotland becoming independent within a relatively short time, which in turn would hasten N. Ireland leaving the U. Kingdom. So, that would be a big factor influencing me to vote ‘Leave’. An overall ‘Leave’ victory in the UK, but where Scotland, Wales and N. Ireland had voted for ‘Remain’ would render the political entity known as the U. Kingdom unviable and hasten its end, although hopefully all its component parts would flourish economically as never before after it ended. This would be the most desirable outcome in my book, but obviously it requires a lot of things to fall into place simultaneously.

Having said that, until recently I’d have expected ‘Remain’ to win easily. In 1975, there was a sharp swing to ‘Remain’ as the referendum got closer. This doesn’t seem to be happening this time – so far. I’d say there are two reasons for this. First, Cameron is running a lousy campaign and has been distracted by a number of scandals. Second, Merkel’s decision to open the floodgates to millions upon millions of immigrants from North Africa, the Middle-East and the Indian subcontinent entering Europe year after year, allied to the fact that a small but not insignificant proportion of them are jihadists (as witnessed in Paris and Brussels), has had an effect in making swathes of the UK electorate even more hostile to the EU than before.

An ABN-AMRO Brexit study that may be of interest.


In the unlikely event of a Brexit, the one outcome that is totally predictable is that the £ will go through the floor, certainly back to near parity with the euro as in 2008. Not good news for Ireland!

When the dust settles, however, Cameron seems most unlikely to be still in place to negotiate – during the fixed two-year grace period – what must become some form of associate membership which retains most, if not all, of the existing advantages for both sides i.e. a form of continued membership but which does not require the UK to sit in any European forum other than those that have no supra-national elements, principally NATO.

The main difficulties that would arise would apply to the two common policies from which so-called third countries, which is what the UK would have become, are excluded; agriculture and fisheries. Again, very big problems for Ireland, especially in relation movement of animals etc.

Of course, nothing will happen until the UK applies formally to actually quit the EU under the agreed treaty procedure binding all the parties, including the UK (Article 50 TEU). The UK parliamentary debate on this should be particularly interesting.

Illusions of Empire take time to filter out ….

These Islands have been in a continuous, and often explosive and dramatic, process of change since WWI.

The open emergence of English (latterly) and Scottish nationalism is to be expected … English Nationalism, imho, won the last election for the Tories – who are rapidly taking the UK back to the 1930s.

Adding to risk of exit is the v. v. poor democratic leadership at EU level … the EU is regressing democratically, socially, economically, psychologically and geopolitically. EXIT must now seem to be a viable option for many … sad to relate. If Brexit we might even have to rejoin the UK and then conduct a little reverse takeover [I believe that Blind Biddy discussed this scenario with HRH during tea some time back]

@John The Optimist

Any update on how Arlene and Martin are getting on with the Tango Lessons? They could teach Mick_an_Enda a step or two …

I see that Fianna Fail are studying Schrodinger … how to be both IN and OUT of Power simultaneously in the same Dail! Are you back on the Mount Street couch? Do you have a cat named Dev by any chance?

IMHO, Merkel’s decision to bring in a million of cheap human capital to the low waged 50% of the German labour force was largely economic … due to German demographics and the ordoliberal/puritan aversion to good sex! Her unilateral stance did not help and the so called EU “deal” with a v. v. dodgy Turkish admin is a disgrace.

Update: Fine Gael have also discovered Schrodinger! Who are they both so afraid of? Poor dears!

For me the two biggest threats for Ireland are
1) Brexit
2) populist tax legislation.

Brexit and a big trade deficit means a drop in sterling. All that uncertainty is bad for Ireland INC.


Agree on the reasons. Cameron dug himself this hole and now he’s barely making an effort to get out. Merkel just opened the flood gates. She had so much political capital. She could have used it to sort out the Eurozone mess. Instead she’s burning through it to maintain her open door policy. The sooner she’s gone the better.

There can be no doubt that the majority in Scotland in favour of the Union was being eroded in the weeks before the vote in Sep. 2014. In response, Labour and Gordon Brown in particular made a serious effort to mobilise Labour voters in support of the Union. The Unionists would probably have won in any event, but it is highly likely Brown’s and Labour’s efforts increased the margin of the Unionist victory. And a measure of the impact Union-supporting Labour voters had on the margin is the extent to which so many of them have subsequently deserted Labour and supported the SNP when they realised they were being taken for fools by the Tory government in Westminster.

Wrt the Brexit referendum, the bookies are probably right. Many people who are minded to vote but who don’t have strong opinions either way tend to leave it very close to the vote to make up their minds. And many of these tend to choose what might be seen as the safer option – in this instance, to remain.

But one shouldn’t ignore the deep-seated democratic strain among many English voters who will reject governance by those whom they cannot directly vote out of office. Rightly or wrongly many of them have this view of those inhabiting the EU’s principal institutions. Nor should one ignore the incessant drum-beat of opposition to the EU and ridicule of the EU that emanates from most of the press and much of the broadcast media. Paraphrasing Yeats, those in favour of remaining lack all conviction and those opposed are full of passionate intensity. It is likely to be a damned close run thing.

The FT has a rolling poll of polls , currently showing 43 to 42 to remain , with 15% undecided. It uses the last 7 polls and then excludes the highest and lowest remain polls , with the 5 then weighted, the most recent given the highest weight.

http://fivethirtyeight.com/ also adjusts published polls in various ways, which seems to lead to much better predictions in terms of US politics.

When Ireland and the UK have made even a fraction of the effort made by Germany, under the leadership of Merkel, to deal with the refugee fall-out from conflicts in the Middle East (for which Germany bears little or no responsibility but for which the UK certainly does), criticism of Merkel may be in order. The question that might also be considered by those with a vote in the matter of Brexit is whether or not the situation would, or would not, be better without the existence of the institutions of the EU.


I agree the UK should share more burden, in particular Tony Blairs wealth should be confiscated and used to help, ditto Bush. But any talk of Ireland having an obligation to share any more of the burden than she already has is nonsense. The kind of stuff people in leafy suburbs in South Dublin come up with ie the same people that won’t have to deal with the consequences. As is saying I shouldn’t critique her decision. I am a European citizen. Her unilateral undemocratic decision will have MASSIVE consequences for the people of Germany and Europe. It’s the biggest policy mess up and abuse of power I can think off in my lifetime, it beats our bank guarantee. Helping refugees of war is one thing opening your borders is another.


Scottish Labour seems to have suffered the same fate as Redmond’s party in 1918. Chaos can do that.

Merkel did the decent thing but the Euro elites are so afraid of the people that there was no follow up. The deal with Turkey is a joke.

There is a common thread that links the leaders of the Brexit campaign and the insurgent campaigns of Donald Trump and Senator Bernie Sanders for the presidency in the United States: they are tapping public anger with the status quo but none of them have set out in credible detail how they would implement their goals after victory.

The problem for the Brexit advocates is that a victory would not just result in short-term uncertainty as there would be up to two years where the UK would have to get agreement with the other 27 member countries on new trading arrangements and while Germany has a big trading surplus with Britain, the members from Eastern Europe would not support big concessions while their citizens would be banned from working in the UK — with a fragile economy, two years or maybe more of uncertainty would not be positive for investment.

The EU has forced Switzerland to change its corporate tax regime and why would the City of London retain its existing market privileges without any new restrictions?

Gideon Rachman, Financial Times columnist, wrote this week that the Vote Leave campaign, fronted by Boris Johnson, mayor of London, has made two key pledges. It promises to control immigration by withdrawing Britain from the EU’s laws on the “free movement of persons” while Britain would continue to enjoy free trade with the EU.

Under EU law, these four freedoms are inseparable. Countries such as Switzerland and Norway — that are not part of the EU but still want unfettered access to the EU market — have had to accept free movement of labour. So which is it to be? Controls on immigration or full access to the internal market?

There is lots of waffle about developing trade elsewhere from people who have never sold anything overseas.

Britain like Ireland is a poor exporter and the British innovation record is also poor.

Cameron, Osborne and others debating the likes of Johnson on TV have the skills to expose the key weak links in the Brexit arguments and throw back in Johnson’s face statements in the past he made about the City of London. This week, Matthew Elliott, Vote Leave chief executive, responded to IMF criticism not by taking on its arguments but questioning its accuracy to make economic forecasts.

Waffle on the accuracy of economic forecasting aside, the UK last reported a trade (goods + services) surplus in 1998 and among its major trading partners, in recent times the only countries where a goods surplus has been achieved has been with the US and Ireland.

The last year the UK reported a current account/ balance of payments surplus (trade + net movements in investment income) was in 1983.

Mark Carney, the Bank of England governor, last January underlined that Britain was “relying on the kindness of strangers” in running an annual current account deficit equivalent to over 5% of national income, which it must finance either by borrowing or by attracting investment from abroad.

That’s Legal?!

1) The likes of Henry VIII no longer rules England.

2) It’s absolute bullshit to suggest that the government of Germany made an “undemocratic decision” and was guilty of “abuse of power” regarding its borders.

3) So with tens of thousands of refugees in transit from Greece, the West Balkans and Austria, Germany should have closed its borders and said go hang?

4) What armchair prognosticators like you ignore is that Germany was trying to get the continent of 500m people to agree on an equitable distribution and what chance would that have had with Germany saying everyone for themselves?

5) Maybe the EU should have agreed to send naval taskforces to the Aegean and Mediterranean seas to sink the boats on the high seas?

6) Angela Merkel was herself a refugee from a tyranny. In the summer of 1961, the then 7-year-old Angela Kasner with her family had their annual holidays in Bavaria. Three weeks after their return, the communists built the Berlin Wall and for 28 years East Germany was a vast prison or officially a workers’ paradise.

In 2014 20% of Germany’s population had a migrant background.

Given Germany’s modern history, the leader of the country was also aware that Germany should show good example to others — it also made good economics as ex-migration, the population is declining.

7) A humane integrated approach was possible but excluding Italy and Greece, where migrants and refugees were coming onshore, only Germany and Sweden can be proud of their endeavours.

Hi Michael,

In reply

1) I don’t know what you’re on about.

2) Why is it bullshit? The people of Germany don’t have a right to vote on whether or not to let in 1 million people a year, some refugees, some economic migrants responding to Merkel open border invite ? Why don’t they?

3) No. Saying ‘go hang’ would be inhumane. Opening the borders is another thing though. You would have to be very naive to suggest the having an open door policy hasn’t incitivesd large numbers of economic migrants to enter Germany. If I was an Iraqi man in my 30s and I heard Germany or Sweden Have gone mad and opened their borders I’d Start walking immediately.

4) Germany has contributed to the problem. See 3. By opening the borders there is chaos. Other countries have, as is their right, not opened their borders on a whim.

5) That would be awful.

6) The economic argument is nonsense. For a migrant to contribute to a society they have to integrate. Some migrants are easier to integrate than others. Those from similar backgrounds educated to a reasonable standard. So you can take large numbers. For example the Polish in Ireland. However others are more difficult and need more resources. The more you take at once the more difficult. If you’re surrounded by your own country men, talking your own language all day, there’s less pressure to integrate fully. Education also matters. Cultural background also matters. As does Your attitude to cultural norms I.e. The equal role of women in society. The majority of the migrants, economic and refugees, entering Germany are also young able bodies men. So some will not be able to find women or employment. My guess is the million a year will be a net burden on German society.

7) Germany and Sweden are throwing their cultural heritage and social fabric out the window. Other countries are right not to follow.

1) Reference to Henry VIII was in respect of the suggestion that Tony Blair’s wealth should be confiscated — even though it may have been a joke!

2) Maybe these days it’s strange that governments would take tough decisions? The Economist 2008:

Germans lag behind the Swiss, who routinely take law-making into their own hands. Referendums and plebiscites still carry a whiff of Weimar and of Hitler’s exploitation of public emotion. The constitution permits them at national level, but the Bundestag has never enacted further laws to make them possible. Yet in states and municipalities, direct democracy has taken off. Since unification in 1990, referendums in these two tiers have become possible in all 16 states. The number of local initiatives has jumped from a handful in the early 1990s to 300 a year.

3) You ignore the reality that Italy and Greece were seriously struggling with the influx of refugees/ migrants while most of Europe was sitting idly by.

It would have been “awful” to sink the boats but Merkel made a huge mistake by opening the borders! It did of course encourage some more to come but what would you have done?

4) I lived in Jeddah for 5 years and I have been in Kuala Lumpur for 9 years — while there are of course challenges with integration, it’s calamity howling to suggest that a region of 500m is facing a threat to its heritage and social fabric.

Bizarrely, this is the complaint of people whose kampungs/villages/ towns have few immigrants.

20% of the Irish native born live overseas; 49% of Metro Toronto residents were born outside the country; 37% of London’s and New York’s populations are foreign born; 35% of Sydney’s and so on – these places are not Dystopias 🙄


Hi Michael,

I’m certainly not against immigration. I’m married to someone from another European country. We live in Dublin, a city with a lot of non native citizens. Not sure how many exactly, probably 20%+, not an insignificant number. And it gives us a great quality of life. It’s obviously a lot nicer place to raise a family than London or New York but I absolutely agree it’s not a Dystopia. Far from it.

I’m not debating whether immigration is good or bad.

My concern is integration. Some immigrants integrate well with little/no assistance, some poorly, even with a lot of assistance. The more of the latter group and the faster they come, the lower the chances they’ll integrate at all.

If you have enough of the not integrated at all group you damage your social fabric. That is what Germany and Sweden are embarking on.

The Turks were fairly well integrated cf Ozil. Germany has an atrocious birth rate problem and needs workers to fund the longevity of the older generation. They have to get this right.

Of course if the Nazis hadn’t wiped out eastern Europe ‘s Jews maybe Germany wouldn’t have to import so many Muslims…

For general information.


“The overall objective is to move from a system which by design or poor implementation
places a disproportionate responsibility on certain Member States and encourages
uncontrolled and irregular migratory flows to a fairer system which provides orderly and safe pathways to the EU for third country nationals in need of protection or who can contribute to the EU’s economic development. The EU needs a robust and effective system for sustainable migration management for the future that is fair for host societies and EU citizens as well as for third country nationals and countries of origin and transit. For it to work, this system must be comprehensive, and grounded on the principles of responsibility and solidarity.”

Merkel is giant among political pygmies right across Europe. Hibernia certainly qualifies as Lilliput.

Both Trump and the Brexit crowd attempt to blame the economic pain on the wrong targets in order to defend the status quo. It is neither Mexicans nor immigrants who are the enemies of pauperising working classes. The enemy is much closer to home.

Both the GOP and the Tories are channelling love will tear us apart, the former over Trump and the latter over Brexit. Both themes are ultimately related to the macro situation and who shall be happy. This is literally unprecedented . The 2 major political vectors of neoliberalism may wipe themselves out as political forces.

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