On 23 June, voters in the United Kingdom will decide whether the country should remain a member of the EU or not. „Investors who – as we generally recommend – are positioned with a globally diversified portfolio of shares and bonds have no significant medium- to long-term effects on their investments to fear, regardless of how the vote turns out,“ says Philipp Dobbert, chief economist at quirin bank.
In the short term, a vote for Brexit could heighten uncertainty in the market. Because if British voters really did decide to leave the EU, this would, first of all, set in motion a lengthy and difficult negotiation process. Many questions would have to be resolved and explored at the negotiating table. For the British, the main aim would be to retain as many privileges as possible in accessing the world's largest single market, while at the same time signing up to as few unwelcome European-policy conditions as necessary in return. „From the financial markets' point of view, such a lengthy process with an uncertain outcome produces one thing above all, namely uncertainty,“ Dobbert comments. In the short term, this could lead to stronger market fluctuations.
50%
of British exports go to the European Union.
Share
Such uncertainty would be reinforced still further by the negative economic effects to be expected at first. It is foreseeable, however, that because the British economy is so heavily dependent on its European partners, it would be the United Kingdom itself that would primarily be affected negatively: while only around ten percent of EU exports go to the UK, a good 50 percent of the UK's exports go to the EU. The immediate effects on the UK economy would therefore, in all likelihood, be far more noticeable than the reverse effect on the EU. „The horror scenarios that have been painted for months in connection with the Brexit decision are considerably overblown,“ says Dobbert. „And that applies both to the speed and to the extent of the possible effects.“ Despite the historic dimension of the Brexit decision, the effects on the economy as a whole and on the financial markets are likely to remain manageable. The only exception: the UK itself.
