Extremely unlikely. They won't even be allowed to clear Euros.

It won't matter, people from the rest of Europe will pay handsomely to keep all of their money hidden in pounds.

Not if the pound continues to devalue against the Euro (and everything else).

Seems likely if it leaves europe with no trade deals.

Why would that continue long term?

Brexit.

The long term effects of Brexit should already be priced in.

The expected long-term effects of each anticipated Brexit scenario weighted by the current perception of the likelihood of each should be, sure.

OTOH, as there is considerable and evolving uncertainty about even the short-term Brexit prospects (as in, will the UK leave, and if so when and on what terms), estimates of the likelihood of various long-term scenarios are likely to also be in considerable flux,even before considering potential evolution in estimates of the effects of each potential scenario.

“The market knows the future and has already completely priced it in” is disproved every time the market moves, but people still like to treat it as some kind of deep wisdom.

> “The market knows the future and has already completely priced it in” is disproved every time the market moves

Well at best you can know the future probabilistically. The fair price of flipping a coin and getting $2 on heads is $1, but once the coin is flipped, you have new information, and the fair price is either $2 (if it landed heads) or $0 (if tails).

I mean more counter examples are great but any one aware of NP=/=P should be able to call bullshit on market's predictive ability.

FWIW, someone took the time to formally state the case: "Markets are efficient if and only if P = NP", https://arxiv.org/abs/1002.2284

> any one aware of NP=/=P

Wait, someone finally proved P ≠ NP?

No, but it's generally understood to be very unlikely [0]. And if something as well studied as markets exhibited NP in P behavior we would have exploited it by now (FWIW, markets appear to be an efficient approximation algorithm like evolution is; approximation algorithms (like evolution) being something we use all the time to solve engineering problems).

[0] https://www.scottaaronson.com/papers/npcomplete.pdf

The yo-yo price of the Pound as no-deal Brexit has become more or less likely over the past few weeks demonstrates that Brexit is very much not priced in.

No-deal would be so damaging that the markets don't think it's going to happen, and that props up the Pound. So it takes a lot of political madness to convince the market that the worst is happening, and that's when the Pound starts plumbing historical depths. Then the madness recedes, and the Pound bobs back up again.

No one knows what Brexit actually is though. It's either not happening, kicking the can down the road till the UK manages to square the circle w.r.t. Northern Ireland [0] (i.e. the current deal), or crashing out with no deal causing days long waits at the ports of entry as inspections take place.

How do you price in all those disparate outcomes into the same price?

[0] UKs own requirements for Brexit are mutually exclusive 1) No customs union, 2) No Northern Ireland border, and 3) No border inside the UK. These three can't exist in the same deal. The only real way to properly Brexit would be to cut Northern Ireland lose or risk reigniting the Troubles by violating the Good Friday Agreement.

> No one knows what Brexit actually is though.

Then you can't make the claim that the pound will continue to devalue. The pound is volatile, but you can't make predictions about the long term value with certainty.

> The pound is volatile, but you can't make predictions about the long term value with certainty.

Something being priced in requires there to be at least some certainty about what will happen.

You can't price the future in. Only probabilities.

Stock options do the same, with a very flawed mathematics (assuming a random walk while having a fat tail distribution). Good luck.

Theoretically, the long term effects of everything ever should be priced in.

Brexit is a whole great big seething can of uncertainty. Just look at the last few years.

Look at the volatility of the pound. It's not moving with news about the long term effects of Brexit, it's moving with the short-term political news. The range of uncertainty is incredibly large: when, how, and whether Brexit happens is still up in the air.

Conditioned on Brexit actually happening, a prediction of a weaker pound is reasonable.

> The long term effects of Brexit should already be priced in.

Why on earth would that be when it has not come to pass yet?

Not so easy as the outcome is very hard to predict. Hard, soft or no brexit? Still up in the air.

How will the UK be doing that? Against OECD rules? The EU would shoot them a second asshole.

You can also hide money in Switzerland, Liechtenstein or other offshore centers. But if you know the market, you know that it has gotten a little bit tricky, especially since last year.

That need not stop them. London was the pioneer of the Eurodollar market in the 70s, and the US treasury at the time tried to stop that.

The Euro didn't exist and the 70's started under the Bretton Wood's agreement. It wasn't until '76 that countries agreed to a floating currency. I don't think London's ability to influence a basket of mediocre pegged currency's gives us any insight into their ability to influence the Euro.

I don't think you understand what EuroDollar means...

https://www.investopedia.com/terms/e/eurodollar.asp

No, I know what the eurodollar is. The power of London over the "eurodollar" at the time was that the businesses and banks in Europe were doing business locally in their domestic currencies (eg Italian Liras) which did not have any international clout. These businesses and banks were effectively forced to go through London Eurodollars to operate internationally to minimize risk. With the introduction of the Euro, none of that matters anymore and London has no power.

how exactly do they plan to do that?

the EU can ban EU firms from using LCH, but they can't stop firms outside the EU using Euros

it'll just end up in a situation like the eurodollar

Will Euros even exist when such a business plan is already hedging against the EU?

Well, the UK joined the EU (or the Precursor, the EC) when it was the sick man of Europe. They did three things

1. Joining the EU

2. Making reforms (Thatcher)

3. Found oil in the Northern Sea.

The oil is gone and they leave the EU. Lets see how that goes.

Please also take this into consideration: https://hbr.org/2019/08/did-austerity-in-the-uk-lead-to-the-...

  3. Found oil in the Northern Sea.

Interesting. No one mentions this aspect much although its known that UK has oil assets.

Could you elaborate on this or add a link to an article that explores this under-mentioned reason as one of the contributing factors for the UK's decision to pull out of the EU?

Were the oil revenues very significant in the previous decades? Have they tapered off due to the U.S. shale boom?[1] Did the UK see this development coming? [2]

[1] Shale gas in the United States

https://en.wikipedia.org/wiki/Shale_gas_in_the_United_States

[2] How The Shale Boom Turned The World Upside Down

https://www.forbes.com/sites/rrapier/2017/04/21/how-the-shal...

"Could you elaborate on this or add a link to an article that explores this under-mentioned reason as one of the contributing factors for the UK's decision to pull out of the EU?"

I did not make this statement. But

1. I once saw a graph that showed that the re-rise of the UK strongly correlated with oil production. The correlation does not imply causation but it was quite stunning. I looked several times for the article but did not find it again. But it made me always doubt that it was only Thatchers reforms the reinvented the UK.

2. I did not say that the UK is pulling out of the EU because of sinking oil revenues. But please consider the article that I already posted: https://hbr.org/2019/08/did-austerity-in-the-uk-lead-to-the-...

UK Oil production: https://en.wikipedia.org/wiki/Oil_and_gas_industry_in_the_Un...

So there may be a connection (less social services, less income from oil, frustrated people). London voted to stay, it was poor areas that voted "leave".

A great article, thanks!

> Potential future earnings when London becomes the offshore Hong Kong of Europe will probably be higher.

Being outside the EU financial system will somehow make it the HK of Europe?

Europe (and HK) already have Luxembourg for that.

I assumed this meant outside the EU, similar to HK’s status compared to mainland China.

No, it’s about where money flows to avoid taxes. The comment suggested money will flow into the UK from Europe after Brexit to avoid tax, however Europe already has Luxembourg.

Isn’t Luxembourg an EU capital city? How would that help avoid EU tax?

Edit: I see you are referring to country specific taxes. Where does Hong Kong play into this then—why not just say tax haven?