- With it still the ‘known unknown’ for UK assets, we broaden the implications of a Brexit-risk for the economy & financial services. This risk could extend beyond the June vote, & also beyond the UK.
- Brexit can still be avoided. But, should it occur, getting to the next stage would be a long, drawn-out ‘can of worms’. Even a ‘soft exit’ would require several years just to end up close to ‘square one’. Spillover means little sympathy in securing a ‘no strings’ deal.
- The pound would fall. Yet, with growth slowing, loose monetary policy would have to be extended - potentially intensifying the pressure from ‘lower for longer’ yields on pensions schemes.
- The impact on financial services would be critical, with Brexit offering macro, ‘passporting’ & regulation risks. Financial services has been the heartbeat of the UK’s recovery, providing disproportionate trade benefits, employment, & tax revenue.
- The sector has, thus, more than most to lose from a Brexit. Given The City’s strong starting point & comparative advantage, Brexit may not short-term be a ‘disaster’. But, is it all worth risking?...
The ECB plunges into European credit through the CSPP