Brexit to trigger UK recession: BlackRock

LONDON: Britain will fall into recession over the coming year and growth in each of the next five years will be at least 0.5 percentage points lower as a result

LONDON: Britain will fall into recession over the coming year and growth in each of the next five years will be at least 0.5 percentage points lower as a result of Britain exiting from the European Union, BlackRock said on Tuesday.

HT Image

“Our base case is we will have a recession,” Richard Turnill, chief investment strategist at the world’s largest asset manager, told reporters at the firm’s investment outlook briefing.

“There’s likely to be a significant reduction of investment in the UK,” he said, adding that Brexit will ensure political and economic uncertainty remains high. Turnill and his colleagues expect the Bank of England to cut interest rates to zero this week from the current all-time low of 0.5%, and expand its quantitative easing bond-buying programme next month.

“The market is not entirely priced for that yet,” said Scott Thiel, BlackRock’s deputy CIO and head of global bonds. This means sterling will fall further, although not as low as parity against the dollar unless in “extreme circumstances”.

New York-based BlackRock oversaw $4.7 trillion in assets globally as of March 31.