No-deal Brexit would have ‘significant impact’ on UK and EU economies, warns Allianz GI chief
The UK leaving the European Union without a deal would have a “significant impact” on the economies of both, said head of Allianz Global Investors (AGI) Andreas Utermann.
Utermann said a hard Brexit is possible “because the players involved in the discussion seem to be – at least in terms of how they are talking about the process – seem to be contemplating very irrational moves”.
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“It’s very difficult to predict now,” Utermann said at a Bloomberg event in London. He has led the firm, which manages almost $600bn (£491bn) of assets, since 2016.
Speaking at the same event, Societe Generale chairman Lorenzo Bini Smaghi described hard Brexit as a “systematic event” which could lead to a global recession.
“This uncertainty, I think, would create quite an impact on the emotion, on the sentiment, on entrepreneurs all over the world,” said Bini Smaghi.
“Consumption would stop, investment would stop and we could have also a recession.”
The prospect of the UK securing a Brexit deal is looking increasingly slim, with German chancellor Angela Merkel warning prime minister Boris Johnson this morning that the UK securing an agreement is “overwhelmingly unlikely”, according to a Downing Street source.
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Utermann said the possibility of no-deal was one of AGI managers’ main concerns, and a combination of Brexit, trade concerns, and a global economic slowdown had made his team much more cautious than six months ago.
He said many portfolio managers “are probably very cautious on sterling and probably cautious on UK equities” as a result of the uncertainty.
Main image credit: Bloomberg