Photographer: Leon Neal/AFP via Getty Images

Poll and Betting Mistakes Mean Britain’s EU Referendum Is No Safe Bet

British politics is in a new place – no one is quite sure what’s going to happen next.

In Britain’s long history of parliamentary rebellions, David Cameron’s defeat by his own side on Monday night wasn’t one of the biggest. It wasn’t even one of the biggest in the shorter history of rebellions against Cameron.

Burdened with a Conservative Party that’s riven over U.K. membership in the European Union, Cameron failed to secure enough votes to enact rules related to the coming referendum on staying in the bloc. The blow was delivered by 37 members of his own party, voting with the opposition Labour Party. 

While Tory rebellions over Europe are as predictable as rain in London in September, the result was a warning to anyone who discounts the possibility of Britain voting to leave the EU in the ballot due by 2017. Because if British politics has shown anything this year, it’s that no one is quite sure what’s going to happen next.

“It’s partly that polling turns out to be much less reliable than we thought it was, and partly that Britain’s seeing its own versions of the new political movements that we’ve had elsewhere in the world,” said Philip Cowley, professor of politics at Nottingham University. “This is a bad time to be in the prediction business.”

U.K. voters have confounded experts and bookmakers again and again this year. Nobody, including the prime minister, expected his Conservatives to win a majority in May’s general election. Received wisdom had it that the Scottish National Party would struggle to get close to 50 seats. And no one, including Jeremy Corbyn, said he had a serious chance of becoming leader of the opposition Labour Party.

Setbacks Suffered

The biggest implication of this trend is that the central assumption of the next two years, that Cameron will steer the country to a comfortable vote to remain in the EU, deserves to be questioned.

The prime minister has already suffered a series of setbacks as he has tried to set the rules of the contest: he won’t get the question he wanted, and after Monday’s vote he won’t get the freedom he sought for government officials to speak on the subject.

Nobody, including the prime minister, expected his Conservatives to win a majority in May’s general election
Nobody, including the prime minister, expected his Conservatives to win a majority in May’s general election
Photographer: Stefan Rouseau/AFP via Getty Images

It’s not just the polls that have been wrong. Betting markets saw the implied probability of a Tory majority decrease as the election approached. The day before polling, Paddy Power Plc was offering odds of 7-to-1 against such a result. In Scotland, the bookmaker did better: by the election, it showed a near-certainty that the SNP would win more than 50 of the country’s 59 parliamentary seats. But in January, it was offering odds of 10-to-1 against that outcome.

Both those pale into comparison next to the shift in Corbyn’s odds to lead the opposition. When he made it onto the ballot paper in June, he was 100-to-1 against. Now, with less than a week to go until the result is announced, Paddy Power has him as favorite, with an 80 percent chance of winning.

Corbyn Skepticism

On the European question, the bookmaker is offering 3-to-1 against Britain voting to leave. That reflects polls showing a consistent lead for staying in, and the prospect that all the main political parties will be arguing in favor of membership.

Both those are now in question: A poll for the Mail on Sunday found the “Leave” option ahead of “Remain” by 51 percent to 49 percent. Corbyn is significantly more skeptical about the advantages of the EU than previous Labour leaders.

Economists at Societe Generale SA reckon there is a 45 percent probability that voters back a so-called Brexit.

“That is very high compared to what most people are saying,” said Michala Marcussen, chief economist at the Paris-based bank. “The markets are completely ignoring the topic.”

Jeremy Corbyn has an 80 percent chance of becoming Labour party leader, according to Paddy Power
Jeremy Corbyn has an 80 percent chance of becoming Labour party leader, according to Paddy Power
Chris Ratcliffe/Bloomberg

For more, read this QuickTake: Will Britain Leave the EU?

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