Markets are rallying on speculation Britain will stay in the EU. So what do the oddsmakers think?
What are the chances of U.K. still being in the European Union for another four years and beyond? About the same as Donald Trump winning the U.S. presidency, according to oddsmakers.
Paddy Power Betfair Plc, Ireland’s largest bookmaker, puts the odds of Britain leaving the EU in 2021 or after at 5/2, or 28 percent. A Trump presidency is rated a 11/4 shot, about 27 percent.
Analysts and traders are now speculating that Brexit might not happen after all, or that it will be limited. Some are saying that this week’s two-day rally, the biggest for London stocks since 2011, was a “reassessment” of whether the U.K. will leave the EU, Rabobank analysts wrote on Thursday. The FTSE 100 Index and a Bloomberg gauge of global commodities recovered pretty much all of their losses since the vote.
“We continue to believe this is the most convincing explanation for the recent curious price action with risky assets taking heart from the possibility a doomsday scenario might be avoided,” Rabobank said.
But the bookmakers’ reputation as a predictor of political events took a big blow last week. Gambling firms had put a 90 percent chance on Brexit being rejected. Shares in the firms have fallen about 10 percent to 15 percent since the referendum. Still, a trickle of gamblers have dipped back into the betting markets to take their chances on other political outcomes, such as the possibility of U.K. authorities holding another vote to try to reverse the result.
“Quite a few people are backing the 10/1 option of a referendum within a year,” said Matthew Shaddick, head of political odds at Ladbrokes Plc.
Ladbrokes says the odds of the U.K. still being in the EU on Jan. 1, 2020, are 3/1, or 25 percent. William Hill Plc says the most likely outcome is that Brexit will take place in 2018 or before, placing a 50 percent probability on that eventuality.
While polls have been about as accurate as betting markets in anticipating political events, a recent Washington Post-ABC News poll showed Hillary Clinton holding a 12-point lead over Trump nationally.