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Post-referendum Q&A with AEW Research & Strategy

Brexit implications and insights

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Brexit implications and insights

Brexit is likely to have a negative shortterm effect on growth, predominantly via reduced business sector confidence and possible delays in capex deployment. It’s possible a reduction in consumer spending may contribute too (more of which below). We expect that over the next four years GDP growth is likely to be 50-100bps lower than if the vote result had been to remain in the EU.

A notable number of sell-side forecasters have been forecasting GDP to either barely grow or contract in the short-term following Brexit. However, such forecasters tended to overwhelmingly be anti-Brexit in the months leading up to the referendum and most of such forecasts cannot be considered impartial. We have long been advised by independent forecaster, Oxford Economics, who forecast UK GDP growth to be negatively affected by Brexit in the short-term, but importantly, do not expect a recession as Figure 1. shows. The independent Capital Economics and Lombard Street Research have also published commentary and forecasts on the outlook for the UK economy that are notably more positive than many of the sellside views.

Source : AEW Europe

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Keywords : AEW Europe