The UK & EU: Exit emergency – Deutsche Bank

By FXStreet Research Team at Deutsche Bank, suggests that one of the most important sources of uncertainty for the UK, however, revolves around a known event – the forthcoming referendum on EU membership, likely to be held this summer.

Key Quotes

“While our baseline case is for the UK to vote to remain in the EU by a narrow majority, polls showing “leave” gaining ground highlight the risk.

Ahead of the referendum delayed investment could be a mild negative for GDP. The biggest hit to output is likely to be felt immediately after a Brexit vote during the exit negotiations. In the longer term the UK should adapt to life outside the EU: lower GBP, looser monetary policy (inflation permitting) and focus on trade with faster growing countries should come to the rescue.

The draft renegotiation broadly accommodated the UK’s four requests of the EU. While there is a clear path to putting this agreement in place, contentious issues remain up for discussion ahead of the February 18/19 summit. In the event of a Brexit, uncertainty will prevail until the exit terms become clear. In negotiating exit options, all of which have their shortcomings, the EU will need to strike a balance between …read more

Source:: FX Street