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If Britain leaves the EU? A world of worries
By Peter S. Goodman
New York Times

NEW YORK — Among those who manage gobs of money, the possibility that Britain might actually disavow the European Union seemed until recently like a remote and even outlandish possibility.

But about a week before voters go to the polls to determine their future, masters of finance are suddenly absorbing the prospect that Britain might really walk, unleashing anxiety and uncertainty throughout the global economy.

Like local responders readying sandbags as a hurricane menaces their shores, financial industry overseers have been quietly drawing up contingency plans while surveying the expensive havoc a Brexit is already wreaking. Central bankers from London to Washington have been monitoring the tempest while making preparations to unleash credit should markets seize with fear.

Angst has seeped into the calculations. As investors digest the possibility that the largest marketplace on earth may be days away from a messy alteration, they have been yanking money out of riskier storehouses like stocks and putting it into safer instruments like bonds. The British pound and London stocks have been falling in frenzied trading.

The conversation is now focused on managing the risks of Brexit. The trouble is that the worries are rife with unknowns that any attack plan amounts to an exercise in guesswork and hope. Executives, bankers, and bureaucrats are grappling with something that could be minor or momentous and has never happened before.

Maybe the Brexit — for British exit — would merely lop value from the pound before traders turned their attention to a more consequential plot twist elsewhere. Perhaps it would inspire separatist movements from Scotland to Spain, embolden anti-trade populists across the Continent, and reinvigorate existential questions gnawing at the common euro currency. That could sow fear across world markets.

A Brexit might spook investors into entrusting their money only to the safest repositories like US Treasuries. That could strengthen the US dollar and weaken US exports, while starving riskier emerging markets of investment.

Whatever stories policymakers and businesspeople tell themselves, the only certainty is a surplus of uncertainty. Whatever provisional plans they sketch, they will find themselves mostly just wishing that nothing terrible happens.

The most nettlesome variable may be trade. Britain sells nearly half its exports within the European Union. Multinational corporations have set up headquarters in Britain, using those bases to serve customers across the Continent.

Those urging a Brexit insist Britain can negotiate a tailor-made deal. Many economists describe that notion as delusional. Eager to discourage other members from considering an exit, Europe would seek to ensure that Britain paid a price.