Brexit impact overstated

Capital Economics has played down the impact a Brexit would have on the UK’s economic recovery says Ryan Bembridge

Brexit impact overstated

Capital Economics has played down the impact a Brexit would have on the UK’s economic recovery.

The research consultancy, led by editors Roger Bootle and Jonathan Loynes, predicted “business as usual” should the UK leave the European Union even though the value of sterling would suffer.

It reckons people will still be consuming in the event of a Brexit, as polls suggest the public doesn’t expect a Brexit to impact them personally.

In its UK Economic Focus publication Capital Economics said: “Although we think that the UK will do well in the long run whether inside or outside of the EU, there is clearly potential for a disruptive short-term impact from the uncertainty that would be seen immediately after a “leave” vote.

“But we doubt that this would be as bad as many fear. After all, remember that negotiations would take up to two years to conclude and in the meantime existing arrangements would remain in place. So it would largely be “business as usual”.

“The most immediate impact would be felt in financial markets (depending on how far markets had already moved before the referendum), with sterling likely to bear the brunt.

“Meanwhile, we doubt that consumer sentiment would be badly affected. After all, people would have got what they voted for! And recent polls show that people generally do not think that a Brexit would make any difference to their personal situation.”

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