Key points
- The impact of Brexit on the EU economy is more difficult to assess than that on the UK economy.
- In such a scenario, a number of factors would play out, with contradictory effects on economic activity and financial conditions.
- Impacts on trade and confidence are most clearly negative for economic growth in the EU post Brexit.
- Conversely, significant investment reallocations away from the UK could benefit the EU in terms of output, jobs, productivity and access to capital.
- Overall, the impact of Brexit on the EU economy is unlikely to exceed 0.5% of GDP. Negative effects are likely to be more immediate than positive ones.
- The bigger question in our view is the implication of Brexit for the future of the EU from a political and institutional perspective.
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