Brexit Scenarios: The good, the bad and the ugly – HSBC

By FXStreet Simon Wells, Chief UK Economist at HSBC, suggests that armed with a measure of uncertainty, its potential impact on GDP and what the policy response might be, they outline three ways in which the economy might be impacted in the event of a vote for Brexit.

Key Quotes

“These scenarios help frame some of the key factors that might impact the near-term economic outlook.

Scenario 1: Markets and businesses take the vote in their stride

Suppose we are wrong about uncertainty spiking in the event of a vote to leave. After all, the UK would remain a flexible and dynamic economy. Markets and firms might simply assume that a free-trade agreement with the EU would be reached, regardless of the type of exit. In this case, any uncertainty-related fall in investment might be offset by a rise in consumer confidence – after all, the majority of British people should be happy as they would get the change they voted for. This could be compounded by business optimism about freedom from EU regulations. Put simply, in this case, there would be little change in the macro backdrop and the investment implications of Brexit would relate mostly to sector-specific factors.

Scenario 2: Uncertainty spikes

In the event …read more

Source:: FX Street