Britain votes on EU future today, frayed nerves in India

LONDON/NEW DELHI: Frantic last-minute campaigning set the stage for a referendum on Britain’s future in the European Union on Thursday, as Indian policymakers moved

LONDON/NEW DELHI: Frantic last-minute campaigning set the stage for a referendum on Britain’s future in the European Union on Thursday, as Indian policymakers moved to reassure currency and equity markets worried about the vote’s economic fallout.

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At stake is not only the future of the post-World War I I European Union project, but also a vote with major implications for the global financial system, given London’s pre-eminent position, and a series of knock-on effects at various levels, including the future of the David Cameron government. It could also spark demands for another referendum on whether Scotland would remain in Britain.

The result of the referendum will be known in India by Friday noon.

As markets and corporate board rooms around the globe kept a nervous watch on developments in Britain, the Reserve Bank of India (RBI) said it will keep the fund tap flowing in case the final outcome leads to copious outflow of capital from Indian markets. “The RBI is maintaining a close vigil on developments, and will take all necessary steps, including liquidity support, to ensure orderly conditions in financial markets,” the RBI said in a statement.

Equity markets were volatile on Wednesday, with the 30-share BSE Sensex closing 47.10 points at 26765.65 in a choppy session.

It was clear on Wednesday that for all the millions of pounds spent on campaigning by both sides, producing reams of leaflets loaded with figures and expert analysis, many people suspicious of claims by politicians remain unconvinced either way, and will decide more by emotion than reason.

Voting booths across Britain will open at 7 am on Thursday and close at 10 pm. Results will start trickling in from late on Thursday night, with the final picture emerging on Friday morning.

From early on Wednesday morning, Cameron and others in the Remain camp, and Boris Johnson and others in the Brexit camp did the rounds of breakfast television and then hit the roads across Britain in “battlebuses” to spread the word.

Uncertainty about the referendum’s outcome has resulted in some amount of turbulence in global financial markets, including in India, the RBI said.

“We are all prepared. We have a foreign exchange reserve of $360 billion,” economic affairs secretary Shaktikanta Das said.

On Monday, RBI Governor Raghuram Rajan, whose term will end on September 4, had said, “Brexit can be quite damaging if it happens.” He added India has “three lines of defence – a good policy, we have pushed out maturities of foreign borrowings…and finally, we have plenty of reserves”.

Tuesday night saw a bitter clash between three leaders each from the “Vote Leave” and “Remain” camps on live BBC television, with Boris Johnson getting the biggest response for claiming a vote to leave the EU will make Thursday Britain’s “independence day”.

Nonsense, Cameron said of the claim, before reiterating the many reasons for his government adopting the official position of campaigning to remain in the EU. He was joined by former prime minister John Major and Labour leaders in the “battlebus” that stopped at several places to address the people.

Cameron insisted in the last round of interviews that Britain had the best of worlds by remaining in the EU: “I am a deeply patriotic person about this country. We have not been invaded for a thousand years, we have got institutions that serve us well.

“I don’t want to give that up to some sort of united Europe and that’s not what we are going to do. We are out of the euro, out of ever closer union, we are proud Brits. But frankly we achieve more if we are in these organisations fighting for British interests and values.”