What Does ‘Brexit’ Mean for Financial Institutions?

Tim Monger, Philippe Morel, Olivier Sampieri, Yann Sénant, and Ben Wade, BCG Perspectives

The vote in favour of “Brexit,” Britain’s exit from the EU, has created significant uncertainty for the UK, the EU, and global economies. The arrangements for the UK’s departure and the terms and timing of the eventual exit are unclear. Resolving the situation will likely take several years. There might be little immediate change—but it is safe to assume that political and economic uncertainty will reign for some time.

Undoubtedly, the long-term economic impact for the UK is negative. According to most economists, the UK’s long-term (2020 and beyond) real GDP post-Brexit will be 3 to 8 percentage points lower than the GDP that the nation would achieve if it remained an EU member. The near-term effects are bleak as well: the UK economy is likely to see a sustained period of low base rates, higher inflation, lower consumer confidence, deflated real estate prices, higher unemployment, and a weaker pound (already, the pound has sunk to a 30-year low against the US dollar).

The rest of this article can be found at bcgperspectives.com.