Recent surveys show that the majority of British citizens — including the nation’s wealthiest hedge fund managers — support Brexit, a campaign urging Britain to leave the EU behind.

Although most analysts overwhelmingly predict that Britain is likely to remain in the EU, the gap in public opinion has been reduced dramatically. The likelihood of the UK leaving the EU has risen from 2% to 33% in the last few months alone.

If I could offer David Cameron any advice on this matter, it would be to never underestimate your opponent…

And then I’d put him on the phone with Hillary Clinton so they could cry together.

The Brexit campaign, which seemed a long shot just a few months ago, is slowly gaining steam in the wake of Europe’s migrant crisis and the economic mess that is the European Union.

Just this week, London mayor Boris Johnson publicly endorsed the Brexit plan, which sent the pound plummeting to lows not seen since 2009.

There is no doubt that the Brexit referendum is rapidly becoming one of the biggest risk events of 2016 for financial markets. Boris Johnson’s decision to bolster the ‘out’ campaign with his support not only serves to undermine the fruits of David Cameron’s labour in Brussels, but clearly damages UK economic confidence, with sterling pounded across the board today. With the referendum set to take place in June, when the migrant crisis will be back into full flow, anxiety and fear will certainly push some voters towards a more isolationist stance.

— Joshua Mahoney, IG Market Analyst

As it stands, Prime Minister David Cameron has been given an ultimatum by members of Parliament and others. Despite his claims for renegotiation to fix the EU, he has been consistently vague about the changes he wants and how he plans to enact them.

It appears that, should Cameron fail to enact radical change, a number of leaders in Parliament will vote to leave.

The majority of Brexit supporters believe the EU has become too bureaucratic and costly. This has led to ineffectiveness and a reduction of power in the hands of national governments. The idea of freedom from EU law becomes even more appealing, as Britain will be able to secure its own trade deals with other important countries — like China, India, and the U.S.

Britain would also be able to focus on domestic concerns, freeing itself from the obligatory £350 million every week to Brussels. Instead, Brexit could lead to funding innovation in scientific research or new industries.

EU regulations also dictate how Britain handles issues like illegal immigration, employment law, and health and safety. The EU determines Britain’s role in international institutions and limits the country’s influence on free trade and international markets.

Breaking away from these regulations will grant Britain the freedom to determine its own financial future and crawl out from underneath the excessive regulations imposed by Brussels. (It will also put a formal halt to the influx of migrant workers flooding the job scene.)

Conservative Party members have called on the U.S. to support Brexit, despite the Obama administration’s support for the European Union.

Former British Defense Secretary Liam Fox says that the Obama administration supports the European Union because it is “large, corporatist, statist and therefore in line with their general economic and philosophical approach.”

However, it’s more in the interest of American investors to have an independent Britain on the world stage.

Brexit would benefit more than just British hedge funders. One of the most important transatlantic financial connections is between London and Wall Street, yet the EU seeks to limit the freedoms of London as a financial hub. Brexit would keep London a center of world finance to invest in the United States, and vice-versa.

We should be seeing this debate come to a head in just a few months, as Cameron has committed to a final decision before the end of 2017. Should Britain decide to exit the EU, American investors could be seeing some lucrative opportunities in the future.

Already-billionaire hedge fund managers stand to make millions more per year should Britain decide to exit, and a handful are already openly supporting the “Vote Leave” initiative.

Crispin Odey, a billionaire founding partner of Odey Asset Management, is one of the most prominent supporters of “Vote Leave,” which would allow investors and businessmen to detour Brussels regulators.  

According to analysis by the London-based Independent newspaper, freedom from the European financial regulatory regime means that hedge funds — which specialize in high-risk, short-term investments — would save about £250 million a year.

It simply isn’t possible to know in advance how much fear will set in to markets or how consumers and businesses in the U.K. will respond. — Bloomberg

Sir Michael Hintze, the fourth-richest hedge fund boss in Britain, denies claims that Brexit will lead to international trade shut-outs: “Do I really think that people would stop trading with us if we go outside the Eurozone? I don’t think so.”

However, there definitely will be a disruption in the trading markets should Britain decide to cut ties with its largest partner — especially since the UK is the sixth largest importer in the world, at $628 billion.

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The only question is whether or not investors are ready to make this event work for their portfolios.

Until next time,

Jennifer Clark for Pro Trader Today