Stop worrying about Brexit: its all good...so long as....? - Rabobank

Analysts at Rabobank noted that the United Kingdom will increasingly be faced with the consequences of the vote to leave the EU, known as Brexit, in the referendum of 23 June this year. 

Key Quotes:

"A weak pound in combination with what at the moment looks like full British access to the internal market will form a strong buffer in the coming years, and the direct effects of the referendum on economic growth would appear to be not too serious. 

The depreciation of the pound will however lead to a sharp increase in inflationary pressure. While it is still unclear what the UK’s future trade relationships with the EU and the rest of the world will look like, uncertainty will prevail.

Our base scenario assumes a smooth Brexit which, despite all the rhetoric, will ultimately not cause unnecessary damage. One focus of attention in the coming years will be the inflow of direct foreign investment. The UK has traditionally been an important base for foreign companies and financial institutions and is therefore exposed to a potential loss of confidence. In the worst case, the UK could lose its unlimited access to the internal market, which would be bad news for the country. 

Foreign banks in the City could lose their ‘European passport’ and leave London, and British industry would have more difficulty in exporting to the EU. However, one cannot entirely rule out the possibility that the UK will ultimately not turn its back on the EU, if for example sufficient concessions with respect to migration of labour can be obtained. 

There is also a court case in progress to decide the issue of whether the UK government is entitled to trigger Article 50, which deals with the starting of the exit procedure, without having obtained the approval of the parliament."

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