Polls And Markets Diverge On Brexit Probability

It looks quite possible that British pollsters could end up with egg on their face once again when it comes to the Brexit vote. In 2015, polls showed a virtual 50-50 election when in fact David Cameron and the Conservatives went on to rout Labour by about 7%. Over the weekend, a couple of new polls on the question of Britain’s exit from the European Union showed the “leave” camp gaining momentum and opening up a significant lead.  The Independent’s poll showed a 10 point lead for “leave”, while the Times and Financial Times showed much slimmer margins but still had “leave” in the lead.

Meanwhile, betting sites in Britain continue to show the “stay” side having a huge lead, with a nearly 2-1 probability that they will win.  In addition, the financial markets and even the European Union have shown remarkably little concern that Brexit will, in fact, occur. Because of the split in the Conservative party, the “stay” vote will need the votes of Labour and the Scottish National party in order to actually win the referendum.  And you really have to wonder how those voters are going to react.  Certainly, many members of both those parties probably think staying in the EU is a good thing. On the other hand, voting to “stay” gives David Cameron even more power going forward, which is not a good outcome for either of those parties. It just might be easier for those voters to stay at home – if the “stay” vote wins, that’s OK; and if “leave” wins, Cameron will probably be ousted, his legacy tarnished and Conservatives in disarray, and that’s OK with them too.

Admittedly, history has shown that the preference for a radical change such as this starts diminishing quickly as you get closer to the actual vote.  What sounds good in the abstract becomes a little more difficult to support when you actually have to vote, especially when the future that change will create is so hard to predict. As I have said before, relying on voters to be reluctant to pull the lever for change once they actually have to vote, if they even vote at all, should not inspire a lot of confidence in a “stay” victory. And, unless the polls change significantly in the next nine days, one side or the other is in for a big surprise.