British house prices could fall by as much as 25% following a Brexit vote!

We are publishing below extracts from the 'Monday Briefing' by Ian Stewart, Chief Economist, at Deloiite UK:

* Last week's opinion polls and bookmakers' odds show a much diminished likelihood of a UK exit from the European Union.

* The average of the last six opinion polls show that, excluding Don't Knows, Remain is on 55% and Leave on 45%. That is the biggest lead for Remain in three months. The bookmakers' odds have moved even further. At the end of last week they were pricing in just a 22% chance of Brexit, the lowest reading in a year.

* The betting odds are widely seen as offering a better guide to the final outcome than opinion polls. The polls are an attempt to create a representative snapshot of how people feel today; the odds are the product of people staking money on the outcome of a future event. In theory, those odds should incorporate all available information, not just the latest polls. 

* Then there is the problem of which poll to believe. Even polls carried out on the same day, by the same pollster, can show wildly different results on the Brexit question depending on whether it was carried out on-line or by telephone.

* Since the Prime Minister announced the date of the referendum on 20th February on-line polls have on average shown Remain and Leave neck and neck. Over the same period telephone polls show Remain ahead by eight percentage points.

* One theory is that Eurosceptic opinion may be over-represented in on-line polls, as voters with strong views are more likely to sign up for on-line survey panels. Another is that by asking people to choose between Remain and Leave telephone polls confront people with the choice they will face in the polling booth, avoiding the escape clause of "Don't know" widely offered by on-line polls. Including a Don't Know option seems to siphon support from Remain and, on this theory, provides a misleadingly strong showing for Leave.

* History suggests that faced with uncertainty and complexity voters tend, as they did during the Scottish referendum in 2014, to stick with what they know. In the last month the Don't Knows have accounted for between 5 and 25% of those polled, more than enough to shift the result in either direction.

* The supposed superiority of telephone polls over on-line polls and of bookies odds over all polls point to a commanding lead for Remain. A spokesman for Ladbrokes told the Financial Times that 90% of the money it has received is for the UK staying in the EU and punters see Remain as, "a rock solid bet".

* Yet while Remain is the clear front runner this is still a two-horse race.

* The punters are often, but not always, right. In the run up to last year's UK General Election the bookies were offering odds of 7/1 on a Conservative majority, an implied probability of just over 12%. This enabled a Glasgow pensioner to pocket £210,000 on a bet placed ten days before the vote. More recently the bookies got it wrong over Donald Trump's success in the Republican primaries and Leicester City's Premiership triumph.

* Undecided voters may tend to favour the status quo, but the evidence of referendums on similar issues suggest the size of the swing from Don't Know to Remain may not be large. Don't Knows are also less likely to turn out to vote on June 23rd.

* Then there are also uncertainties about turnout. According to the Financial Times only 200,000 out of several million UK expats have registered to vote. The change from household to individual registration has resulted in the loss of one million people from the voter register, many of them likely to be younger, more pro-EU voters.

* My hunch is that the bookies odds, at 22%, are underestimating the probability of Brexit.

* But I would be the first to concede that such off the cuff prognostications are no more reliable than the polls or the punters. In March of last year, the London School of Economics asked eleven academic forecasting teams to predict the outcome of last year's UK General Election. Not one predicted the actual outcome, a majority Conservative government.

Brexit and European politics

* The "What the UK Thinks: EU Poll of Polls", based on the average share of the vote for 'Leave' and 'Remain' in the six most recent polls carried out between 11th May and 17th May shows Remain with a growing lead, on 55%, compared to 45% for Leave (adjusting for the removal of "don't knows")

* According to the latest political betting odds cited by PaddyPower, there is currently just a 22% implied probability of a Brexit vote – down sharply from last week's 31%

* Sterling registered its largest daily gain against the euro so far this year, following a number of opinion polls showing a growing lead for Remain ahead of the EU referendum vote

* In a worrying sign for the Remain camp, who are hoping for a large turnout of younger more pro-EU voters, a poll of more than 2,000 students by Universities UK showed 63% of students were not able to name the date of the EU referendum, with 54% unable to say in which month it was taking place

* Only around 200,000 British expats have registered to vote in the EU referendum, according to data from the Electoral Commission, meaning this group of likely pro-EU voters will make up just 1% of all eligible voters on June 23rd 

* The number of EU nationals working in the UK has risen to a new record of 2.1m – now accounting for 6.8% of the workforce – further fuelling the debate on immigration just weeks ahead of the referendum

* A ComRes poll for the Daily Mail showed how opinions on EU membership are split down party lines, with Labour voters split 80:20 for Remain and Conservative voters split 51:49 

* In a potentially unwelcome intervention for the Remain camp, the president of the European Commission warned British voters ahead of the EU referendum that "deserters will not be welcomed back with open arms"

* British house prices could fall by as much as 25% following a Brexit vote, according to analysis by ratings agency Fitch, who also warn that continued rising migration could stoke social tensions if Britain stays in the bloc

* The IMF warned that a vote to leave the EU would lead to a protracted negotiation process over the terms of the UK's exit, "weighing heavily on investment and economic sentiment during the interim and depressing output"

* The Times reports that The Bank of England is having "daily conversations" with banks to ensure they could cope with any market turmoil in the event of a Brexit vote

* Charles Grant, Director of the Centre for European Reform, said in a letter to the FT that the EU would be highly unlikely to offer a post-Brexit UK a relationship akin to the one Switzerland currently has with the bloc, "since it regards the Swiss model as broken"

* John McDonnell, the shadow chancellor, said in a speech that only Labour can "rescue" the EU referendum debate "from the negativity and 'Project Fear' coming from all sides of the Tory party"

* In a letter to the Sajid Javid, the UK's Business Secretary, the Institute of Chartered Accountants in England and Wales warned that the British government is "losing sight of the economy" and using the EU referendum as an excuse for policy inaction

* The Confederation for British Industry drew strong criticism from the Leave camp after suggesting "responsible business leaders should give their employees the choice to hear what impact a Brexit would have on company growth, their jobs and their local community"

* Boris Johnson claimed that leaving the EU would help ease the UK's "scandalous" NHS waiting times

* Former Chancellor Ed Balls and former business minister Vince Cable joined forces with Chancellor George Osborne to warn that a vote to leave the EU is a "one way ticket to a poorer Britain"

* A Guardian survey of Britain's so-called 'unicorns' – private tech companies with a valuation above $1bn – shows none of the 14 companies contacted by the newspaper were prepared to say they support Britain leaving the EU

* The former head of Britain's intelligence agency M16, Sir Richard Dearlove, warned of a "populist uprising" in Europe unless leaders can show that they have control over the migration crisis

* More than 300 business figures signed a letter published in the Daily Telegraph calling for Britain to leave the EU, arguing that membership of the bloc undermines the country's competitiveness 

* The heads of GE, Cisco, Mars and Airbus, signed a plea by leading multinational companies for Britain to stay in the EU, claiming that "If there is one thing we as investors do not like, it is economic uncertainty"