Brexit is not guaranteed to lead to a crippling recession, economist says
Slowing down likely but economy will still grow, according to Bloomberg expert
- UK Treasury has predicted major problems and an economic recession should Britain vote to leave the EU
- Brexit referendum to take place on Friday 23rd June, now less than two weeks to go
The economic aftermath of a United Kingdom exit from the European Union may not be as harsh as many experts fear, according to the opinion of Bloomberg economist Jamie Murray.
The UK Treasury's analysis of the outlook predicts a sharp recession for at least a year following a potential Leave vote. Bank of England governor Mark Carney has warned of "a technical recession," defined as two consecutive quarters of falling output.
The UK Treasury's analysis of the outlook predicts a sharp recession for at least a year
With the Brexit referendum now less than 2 weeks away, the predictions have been fairly dire so far.
Murray, from Bloomberg Intelligence in London, disagrees however.
"To have a recession of any significant magnitude, what you need is a credit crunch, a significant shock,” he said. "“We don't think that will happen because the BOE has already pledged to provide as much liquidity as is needed.”
The Treasury analysis sparks concerns of an effect on confidence and a deeper supply shock than most others, as well as assuming the BOE does nothing to support the economy. All that gives a very mild recession: four quarters each with a 0.1 percent contraction, under the “shock scenario.”
Murray has predicted that Brexit would decrease Britain's growth by 0.4% this year and 0.9% next, but the expansion of the economy would still continue.