A decision by the UK to exit the European Union would likely trigger a big
selloff in the pound, a sharp decline in household income and a
recession, according to billionaire investor George Soros.
With just a few days to go before Britons vote on whether to exit the European Union or remain, legendary financier George Soros issued an urgent warning about potential consequences.
"Too many believe that a vote to leave the EU will have no effect on their personal financial position," Soros wrote in an op-ed to be published Tuesday in the Guardian newspaper. "This is wishful thinking."
Citing estimates from multiple authorities including the Bank of England and the International Monetary Fund, Soros said the average income loss per household due to a falling British currency would be between £3,000 and £5,000 annually ($4,400 and $7,335).
Soros understands fluctuations in the British currency — he made a good chunk of his fortune betting against the pound in 1992. Now he is predicting that a Brexit would cause a 15 to 20%decline in the currency.
While the 1992 tumble ended up aiding the country in the long run, as it brought down interest rates and helped ignite a recovery, Soros said that this time around the devaluation would not be healthy.
He cited three reasons: The Bank of England could not cut rates from already low levels; the UK has a large current account deficit and likely would not see another inflow of cash; and the loss of currency value wouldn't help exports, because of uncertainty in trading conditions that the Brexit would trigger.
"I want people to know what the consequences of leaving the EU would be before they cast their votes, rather than after," Soros wrote. "A vote to leave could see the week end with a Black Friday, and serious consequences for ordinary people."
All eyes are on the UK, including those of George Soros. Photo: iStock
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— Edited by Martin O'Rourke