I knew it would be close, but I didn't see that coming. I wasn't nearly as wrong-footed as financial markets, though. The violent swings we saw on Friday were a reflection of a monumental error of judgement by the collective wisdom of "the market".
Markets often get things wrong
They have a tendency to be complacent when they should be cautious, and to overreact to bad news if things don't go their way. Investors who can ignore the bipolar nature of markets, keep a clear head and position themselves somewhere in the middle often do well. Anyway, here are five things we can expect post-Brexit.
The celebrations in the UK might be short-lived
I'm sure it was a great party for the "leave" campaigners, although in six months' time they might not feel like winners. The UK Treasury estimates Brexit will mean a recession, lower wages, a sharp drop in house prices and a rise in unemployment of 520,000 people. The wheels are already in motion at some multinationals, with one US-based CEO suggesting up to 25 per cent of his UK workforce could be relocated to Europe. The UK could well be better off in the long-term, but the immediate future is decidedly negative.
Politics will keep volatility high for a while yet
Economists and traders grossly underestimated the groundswell of discomfort in the UK at present, and there is an undercurrent of similar ill-feeling right across the world. Expect more of the same as we head into the US election later this year, and then France and Germany in 2017. A vote for Trump is just as much a vote against the establishment - and an awful lot of people are unhappy with the establishment.
Interest rates will go down further
Lower growth, higher uncertainty and big currency moves will put even pressure on central banks to keep interest rates low. A cut in the OCR in August seems likely now, and it wouldn't take much to go below two per cent. However, borrowers might be unwise to get too excited, as uncertainty could drive bank funding costs higher and offset this.
