Brexit will cause economic shock for UK, say Credit Suisse analysts
A UK vote to leave the EU will cause an economic and financial shock for the UK, analysts at Credit Suisse have warned. Whilst analysts predict that the UK will vote to stay in the EU, they say that the consequences will be “drastic and long lasting” if a Brexit does occur.
Credit Suisse economists, Neville Hill and Sonali Punhani, said that a drop in business investment, hiring and confidence is expected.
“A sudden stop of capital flowing into the UK could make the large current account deficit difficult to sustain and lead to a sharp fall in sterling,” they added.
This could result in a 2% drop in GDP due to the “toxic blend of depressed business confidence, tightening financial conditions, higher inflation and falling real incomes.”
IMF managing director, Christine Lagarde, recently expressed concerns that fears of the UK leaving the EU are causing turmoil on global financial markets. She said that Europe’s economic outlook has improved and expects global growth to be 3.4% up in 2016 from 3.1% last year, but added that one of her biggest concerns is a Brexit.
Concerns have also been raised over how an exit from the EU would affect jobs and economic output, but experts said the impact would depend on the status of the UK outside of the EU.
The possibility of a Brexit has received mixed views from businesses, with some saying that they will not be affected by a vote to leave the EU and others hinting that they will quit the UK if it occurs.
US bank JP Morgan is amongst the companies that could leave the UK if it voted to leave the EU, with chief executive, Jamie Dimon, stating: “We’d like to stay there, but if we can’t, we can’t.”