Experts react to U.K.'s shock Brexit from European Union
As financial markets reeled following the U.K.'s vote to leave the European Union, economists and market analysts sought to digest the potential impact of a "Brexit" on the British and global economies. Following is a snapshot of their reactions to the shock vote:
- "There are moments in history when the impossible becomes inevitable without ever passing through improbable. The period after the Lehman bankruptcy was such a time. Last night's unexpected repudiation by British voters of 50 years of EU membership is another. The outcome of the referendum is a shock fully comparable to the bankruptcy of Lehman." -- Anatatole Kaletsky, co-chairman of Gavekal Research and author of "Capitalism 4.0"
-"Britain's shock vote to leave the E.U. has unleashed a wave of economic and political uncertainty that likely will drive the U.K. into recession." -- Samuel Tombs, chief U.K. economist, Pantheon Macroeconomics
- "The direct fallout on the U.S. economy will be limited. U.S. exports to the U.K. make up only about 0.7 percent of U.S. GDP. So even if the U.K. falls into recession as a result of Brexit, which PNC now views as a 40 percent probability, the hit to U.S. exporters will be small." -- Gus Faucher, deputy chief economist, PNC Financial Services Group
- "While Brexit likely spells a stronger dollar and weaker U.S. exports than otherwise, it also should be associated with even lower longer-term interest rates--a positive for the economy, in our view. -- Maury Harris, economist, UBS
- "With social unrest and political fragmentation increasing elsewhere in Europe in recent years, there is a risk that the outcome of the U.K. referendum will amplify pressures on other member states." -- Societe Generale analysts
- "While the movement in the UK to leave the EU had right-wing, anti-immigrant and xenophobic leaders, in most of Europe that is not the driving force of the massive loss of confidence in European institutions. The driving force in most of the European Union is the profound and unnecessary economic failure of Europe, and especially the eurozone, since the world financial crisis and recession." --Mark Weisbrot, co-director, Center for Economic and Policy Research
- "This morning's sharp moves in sterling and sterling-denominated assets suggest that, for the second time in just over a year, most investors had taken opinion pollsters on their word. 'Fool me once, shame on you. Fool me twice, shame on me,' as the saying goes. -- Richard Batley, head of macroeconomics, Lombard Street Research
- "Once the dust has settled, the global economic implications of the U.K.'s vote to leave the European Union are likely to prove much less dramatic than many had suggested during the past few weeks. The adverse effects on the UK itself and the direct impact on other European economies should be small. And there may be some offsetting benefits for the global economy, including looser monetary conditions. However, the long-term political consequences could turn out to be far more significant." -- Andrew Kenningham, senior global economist, Capital Economics
- "In the end, we don't expect these developments to be enough to stop the U.S. labor market from continuing to improve. We expect the unemployment rate will keep trending down, core inflation and wage gains will keep edging up and the Fed will be tightening again by September." -- Jim O'Sullivan, chief U.S. economist, High Frequency Economics
- "The vote is done. Is the market now set to run? One uncertainty gone. Awesome. Wow. But what new worries may come along now? China, Greece, a sluggish pace? Will capital spending be restrained by the White House race? Slowing jobs, productivity lame. Are we just doomed for "more of the same"? Oceans rise. Empires fall. Markets often climb a worry wall." -- Scott Brown, chief economist, Raymond James
- "Of course what becomes of the EU in coming years is now the vital question. Is this the needed wake up call to a EU parliament that has 40,000 employees doing god knows what except implementing rules, and if some of those rules get broken, like debt and deficit limits, there are no consequences?" -- Peter Boockvar, chief market analyst, The Lindsey Group
- "Our economists expect a recession in the U.K. and a significant hit to euro area GDP over the next 12 months. We expect knock on effects to the world economy too. All of which will hurt earnings." -- Bank of America Merrill Lynch analysts
- "Today will be an ugly day in global financial markets. But since nothing will change right away, a market overreaction presents an attractive buying opportunity." -- Greg McBride, chief market analyst, Bankrate.com
