Brexit Betting Update: Remain still favourite after Cameron's tax scandal

Cameron - lurching from one crisis to the next?
Cameron - lurching from one crisis to the next?

Following revelations about his tax affairs, David Cameron has endured one of his toughest weeks since becoming Prime Minister. But bettors still believe that Britons will vote to stay in the EU on June 23. Max Liu has all the latest...

After one of the most torrid weeks of Cameron's premiership, the Brexit is trading at [2.9] (about a 35% chance) with Britain [1.54] (65%) to remain in the EU.

For the second time in three weeks, David Cameron is embroiled in a political crisis. The fall-out from the "Panama papers", and revelations about the Prime Minister's tax affairs, could have long term consequences for Cameron, but will they, in the short term, affect the outcome of the referendum on Britain's membership of the European Union?

At the moment, bettors think not. After one of the most torrid weeks of Cameron's premiership, the Brexit is trading at [2.9] (about a 35% chance) with Britain [1.54] (65%) to remain in the EU.

In contrast, a poll published on Wednesday put Remain ahead by just 1% with 18% saying they were still undecided.

Cameron's week from hell reached fever pitch on Thursday night when he admitted that he used to own shares in the Panamanian trust set up by his late father. As well as speculation about the PM's future, this lead some commentators to argue that "what's bad for Cameron is good for Brexit". The EU referendum, they argue, is in danger of becoming a vote on Cameron's political future.

Even before the PM's tax problems, it had been a bad week for Remain. The government infuriated Boris Johnson, Michael Gove and other prominent Brexiters by spending a reported £9m on a pro-Remain leaflet which will be sent to British households. UKIP leader Nigel Farage called it a "government scam" which confirms that "this referendum will be defined by the battle of the people versus the political class".

Cameron's tax scandal, Farage hopes, will make the public more receptive to this kind of anti-establishment rhetoric. That might be so and, as the SNP's success in Scotland, the emergence of UKIP and the election of Jeremy Corbyn as Labour leader demonstrate, fervent dislike of the Westminster elite is a potent force in British politics.

So why is Remain still the favourite on Betfair? Bettors don't appear to buy the line that Cameron's problems will influence the outcome of the referendum. They're convinced that, when it comes to making an important decision about their country's future in two-and-a-half months, the majority of Britons will go to the polls and calmly choose the status quo.

The PM will in all likelihood survive the current storm about his tax but the real consequences for the Conservatives might lie further down the road. There's a mounting sense, following the tax credits u-turn, Osborne's botched budget and Duncan Smith's resignation, as well as the ongoing junior doctors' strikes, that the government is losing support.

Cameron's tax scandal undermines his attempts to detoxify the Tories and reinvent them as the party of fairness and responsibility. As with Osborne's budget a few weeks ago, it's another blow to the idea that "we're all in it together". With his personal approval rating lower than Corbyn's, the PM is, like John Major in the mid-1990s and Gordon Brown in the late-2000s, in danger of losing control of the political narrative and lurching from one crisis to the next.

For now, bettors are being cautious, with the odds on a Conservative victory in 2020 moving only slightly, from [1.91] to [2.02] (about a 50% chance), in the past fortnight. However, with Labour [6.0], No Overall Majority [2.2] might be worth grabbing before it shortens further, if you want a long term bet.

In the next few days, as he tries to see off accusations of hypocrisy about tax, Cameron can expect his party's backing. The furious reaction by Brexit-supporting Tories to the government's Remain leaflets, however, indicates that the campaign will turn uglier before the referendum. Even if the markets are correct and Britain stays in the EU, Cameron will face a tough task to restore harmony to his party. That could hasten his downfall and put the Tories' chances of re-election in 2020 in jepoardy.


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Max Liu,

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